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Convenience Retailers Explore New Avenues to Draw Fuel Customers Inside

Operators are turning creative marketing ideas, partnerships and mobile apps to drive pump-to-store conversions.
The Kum & Go mobile app with in-store promotions

NATIONAL REPORT — With the majority of customers opting to pay at the pump for their fuel purchases rather than go into the convenience store, retailers are working harder than ever to entice them inside to purchase other higher-margin items — whether it's food, snacks or something to drink. C-store chains with a unique offering, combined with a way to alert customers to it, are faring much better in achieving the pump-to-store conversion in today's competitive marketplace.

"C-stores need to have a differentiated offer that is worth coming in for, and they need to do a good job at messaging that differentiation," said Ryan Lindsley, vice president of marketing and digital strategy at Des Moines, Iowa-based Kum & Go LC, operating 390 c-stores.

It's important to show how a store can fill multiple needs through a single stop, such as gas, milk, a beverage and dinner. "Research shows 30 percent of consumers who stop at a c-store are stopping somewhere else on the same trip for items that can be purchased at the c-store," he noted.

Technology, which continues to evolve in the entire retail space, is helping retailers convey their in-store offerings and target customers fueling up at the pump beyond static signage and pumptoppers. Today, there is video at the pump, mobile apps, text messaging and geofencing that lets a store know when a customer is nearby or at the location.

"There have been so many tech advancements, including options available for smaller retailers with less of a budget," said Peter Rasmussen, CEO and founder of Convenience and Energy Advisors, based in Boston. "There are platforms such as Rovertown [that] create apps for c-stores that work on top of a loyalty engine, allowing them to create segmented and targeted offers, and knowing when a customer pulls onto the lot."

Since before the COVID-19 pandemic, pump-to-store conversion rates for the industry have been dropping, down 8 percent in 2022 compared to 2019, according to VideoMining's C-Store Shopper Insights enabled by CSI Tracker. The company partners with retailers across the United States to track store visits through cameras and other equipment, and releases reports every quarter.

"What is really surprising is the drop between pre-pandemic and now, because most behaviors have settled back to pre-pandemic levels," said Rajeev Sharma, founder and CEO of State College, Pa.-based VideoMining. "We do think higher gas prices and inflation could be factors, as well as more people working from home and not making the commute to work."

[Read More: C-store Retailers Face Three Hurdles to Sales Growth]

With these external factors at play, and the biggest margins for c-stores being inside the store, it is more important than ever to entice customers inside. Many retailers are using foodservice and other unique offers to do this. VideoMining's research shows that those with a robust foodservice offering have better pump-to-store conversion rates. "We see foodservice offerings drive not only pump to store, but also direct traffic in the c-store industry," Sharma said.

Making the Most of Mobile

Today's consumers are on the go, but one thing they always have with them is their mobile phone. C-store chains with a mobile app can leverage this to grab a customer's attention, whether through geofencing or engaging them directly when they use the app to activate a pump or pay for fuel.

"With geotargeting, c-stores can target customers by store location, know when they are filling up their gas tanks at the forecourt, and push offers through to encourage them to go inside," said Rasmussen. "It's really magical what is in scope now and attainable for retailers."

Kum & Go launched mobile pay at the pump through its app in May 2020. Once a customer activates the pump with the app, the app begins trying to upsell them on products in the store, according to Lindsley. The retailer offers mobile ordering capabilities as well.

"Mobile is one of the best tools available today to increase pump-to-store conversion," he said. "Mobile ordering offers the capability for customers to buy and then pick up in the store, but they can also choose to stay at the pump and we will bring the product to them."

While it varies from store to store, between 30 and 40 percent of the products available inside can be ordered via mobile at Kum & Go locations, along with most of the chain's foodservice menu. The products featured for upsell on the app are usually those on promotion and ones that are easily fillable by the associates in the store, according to Lindsley.

Currently, the offers appearing to customers on the Kum & Go app are curated by the company's category management team; however, the company is planning to add personalization in the future to target specific offers to customers based on their past purchases, and more. Planning is underway to upgrade the app to create a more personalized experience for each customer.

Kum & Go is also in the process of overhauling its pump technology so that every store features either a full touchscreen or a screen with colored buttons that customers can interact with. These screens will feature promotions, further driving the pump-to-store conversion.

Creative Marketing

Another way convenience store chains are reaching new customers and getting them to their locations, where they can then entice them inside the store, is partnerships. Companies such as Mudflap for truck stops and Upside for gas stations have apps where they will list a retailer's stores and offers in order to drive traffic and sales to those locations.

Kum & Go recently started a partnership with Upside, whose mobile app identifies consumers not already visiting a location and uses cash-back promotions through the app to attract them there. The chain will be launching Upside at 200 of its stores.

Another creative marketing tactic that Kum & Go used last summer was tying center-store purchases with fuel discounts on its own; customers who made a purchase in-store were able to accrue cents off a gallon in their loyalty account.

C-store retailers also have the option of partnering with other companies in their area, or larger chains outside the c-store industry, for cross rewards. Delta has offered cross rewards with Starbucks in the past, while Marriott has a partnership with Uber, Rasmussen noted.

"Pump to store also comes down to fundamentals like are your pumps clean; do you have quality digital programming to highlight the food you offer, whether it's audio or video messaging at the forecourt; and does the store look inviting, bright, open and safe?" he said.

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