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Convenience Channel's Digital Ordering & Delivery Landscape Shifts

Once a pandemic-driven necessity, these services are now table stakes for foodservice retailers.
Angela Hanson
A woman accepting home delivery

NATIONAL REPORT — from an operational standpoint, the prospect of adding delivery to a foodservice program has notable pros, but also distinct cons with convenience store retailers listing lower profit margins, disruptions to kitchen flow and ceding control to third-party drivers as their top concerns.

However, when c-store retailers factor in the evolution of customer expectations and what shoppers currently value most when it comes to convenience and a good experience, pairing delivery with a digital order-ahead option has the potential to yield long-term boosts to sales and profits.

When digital ordering and delivery services first launched, they were much more strongly associated with restaurants than convenience stores. Today, time and a boost from the COVID-19 pandemic have changed consumer perceptions.

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"I believe the whole perception of convenience stores has changed since the pandemic. While our chain has always had a food-centric focus, the industry really took on the idea of providing high-level foodservice," said Chris Hartman, vice president of fuels, advertising and development at York, Pa.-based Rutter's. "This has opened the door for customers to feel comfortable ordering convenience store food from an Uber Eats or DoorDash because they do it on a frequent basis already."

Rutter's, which operates 85 c-stores across Pennsylvania, Maryland and West Virginia, launched Paytronix Online Ordering in 2023 whereby its VIP Rewards members can order food online or through the Rutter's mobile app. As a result, the retailer has seen a 25% increase in visits among loyalty members and a 10% boost to their check size, Hartman reported.

[ Read more: EXPERT'S VIEW: Can C-stores Deliver the Goods?]

Matt Emmert, Uber's head of strategic operations for grocery and convenience in the United States, told Convenience Store News that as consumers evolve to a "get-anything-delivered mindset," the delivery platform is helping raise awareness of c-store operators. "Grocery and retail, which includes convenience, is now around a $7 billion business worldwide and is still growing rapidly," he said.

At Irving, Texas-based 7-Eleven Inc., the largest c-store chain in the U.S., offering delivery is paying off, according to a company spokesperson, who explained that through the retailer's 7NOW Delivery program, 7-Eleven has been able to expand the reach of its foodservice offerings, enhance convenience, and foster brand loyalty among new and existing customers.

"Notably, our fresh food selection has experienced a surge in popularity through 7NOW. Customers appreciate the convenience of enjoying high-quality food and beverages without leaving the comfort of their home or office," the spokesperson said.

While 7-Eleven caters to both in-store shoppers and 7NOW customers, the company has begun adding more specific delivery-focused deals, such as a recent app-only discount on Pi Day (March 14).

"We've observed that our customers utilize both shopping options in different ways, so our promotions aim to accommodate this diverse shopping behavior," the spokesperson added.

The Cost of Entry

As consumer acceptance of digital ordering and delivery has evolved, so too has the process of getting started in this space. Retailers that might have once balked at the process, particularly small chains and independents, may now find it worthwhile to move forward.

"The technology has come a long way, so the startup cost to do apps and online ordering isn't what it once was," Rutter's Hartman conveyed. "Convenience is critical to our customers who are generally time-starved, so the more convenient you make things, the higher ceiling you have."

C-store retailers venturing into digital ordering and delivery have options beyond retrofitting technology originally meant for restaurants, as ordering platforms and third-party delivery partners have adapted to the convenience channel's unique needs.

"For our smaller partners, we ship a tablet or mobile device that they can use to manage operations — including updating their catalog, leveraging demand generation tools like item and order level promotions and sponsored listings, and accepting/fulfilling orders,"

explained Uber's Emmert. "For larger partners, we can also integrate directly into their existing POS [point-of-sale] system. In either case, we have an onboarding and account management team to make the process as seamless as possible and ensure the retailer is set up for success."

Adding delivery doesn't have to mean adding a complicated new dimension to a store's operations. Retailers can tailor the level of integration to their needs and limitations.

"I'd say that it's quite easy to get started and start generating incremental revenue from the large consumer base on Uber who are coming to our apps to make purchases for delivery. This is especially straightforward for independent c-stores who want to give it a try," Emmert said.

Larger operators also work with Uber for last-mile delivery of orders that originate from the retailer's own apps and channels via its Uber Direct product. "There really are options for c-stores of all sizes depending on their needs and their business goals," noted Emmert.

Convenience retailers that decide to add digital ordering and delivery must make sure they properly set up the backend so that in-store employees aren't scrambling to get everything done. If they opt to incorporate multiple third-party delivery partners, a technical setup that consolidates incoming orders to one location will keep things streamlined.

As long as the preparation area is organized appropriately, digital ordering could even boost efficiency by helping employees prioritize tasks.

"Digital ordering capabilities help employees better perform their duties, especially in foodservice," said Bonnie Woods, convenience strategist for Newton, Mass.-based Paytronix, a provider of digital guest engagement platforms. "Customers are given a time period of when their order should be ready, so it gives employees a buffer to get it fulfilled at a high level, while also taking care of customers in the store. I don't believe it's a replacement for employees, but it does alleviate some of the stresses of their job."

One downside to third-party delivery is loss of control over the full customer experience. If a customer has a problem with an order, retailers risk being associated with the bad experience despite having

no hand in the delivery. To mitigate this, Uber invests in courier education programs that emphasize the importance of customer satisfaction and proper order handling. It also collaborates with retailers on proper picking and packaging to ensure orders are ready for delivery.

"Our systems are built to monitor delivery experience and both make improvements in real time and importantly to take action on the merchant's behalf when things go wrong so that consumers feel they've had a positive experience end to end," Emmert said.

Leveraging Loyalty Programs

Loyalty programs can serve as the cornerstone of a successful digital ordering program. 

Rutter's Hartman recommends developing digital ordering in tandem with a loyalty program rather than rolling out digital ordering once a loyalty program is in place and mature.

"Loyalty programs are about a value proposition, so giving customers more reasons to sign up will always be key to the success of the program," he reasoned.

C-store retailers that already have a loyalty program, but are earlier in their foodservice journey can also boost profits by adding digital ordering, according to Paytronix's Woods.

About the Author

Angela Hanson

Angela Hanson

Angela Hanson is Senior Editor of Convenience Store News. She joined the brand in 2011. Angela spearheads most of CSNews’ industry awards programs and authors numerous special news reports. In 2016, she took over the foodservice beat, a critical category for the c-store industry. 

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