Convenience Retailers Investing in Next-Generation Tech

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Convenience Retailers Investing in Next-Generation Tech

By Tammy Mastroberte, Convenience Store News - 06/28/2012

JERSEY CITY, N.J. -- Walking into a convenience store today, consumers interact with a variety of technology applications, from pay-at-the-pump and point-of-sale (POS) to kiosks and video monitors. At one point, these technologies were considered cutting-edge, but these days they are staples for many chains.

Now, there is a new crop of next-generation technology, including social media analysis, mobile payments and mobile applications (apps). While retailers are still spending on technology considered critical to operate their business, they are also investing in the latest and greatest. More than half (51 percent) of respondents in the exclusive 2012 Convenience Store News Technology Study indicated they participate in social media, and 22 percent offer mobile apps to customers.

In 2010, only 26 percent of chains participated in social media, and this number jumped to 41 percent by 2011. This year, 51 percent report participation, and this figure is expected to continue to rise. Social media, along with mobile apps and mobile payments, are certainly top-of-mind for c-store chains and offer major opportunities for those that jump on board.

Facebook is the most popular social media network, followed by Twitter and foursquare, and the majority use social networking to advertise promotions at stores (94 percent), as well as events (72 percent). Other content offered includes contests (47 percent) and engaging members with questions (41 percent), according to the CSNews study.

Loyalty programs, whether point-based or proprietary credit cards, are another way c-store retailers are engaging customers. Currently, 60 percent of respondents offer some type of loyalty program, up from only 44 percent last year, and are split down the middle with 41 percent using point-based and 41-percent proprietary credit cards.

Also increasing in popularity are mobile apps, with 22 percent offering customers the option, up from only 13 percent last year. All retailers with a mobile app feature a store locator, and 75 percent offer coupons through the app. Limited-time only specials and customer feedback are also popular, both used by 67 percent, and more than half (58 percent) offer fuel prices to customers via their app.

Topping the list of future technology investments are better management of store-level inventory and revenue (42.9 percent) and social media (38.8 percent), moving to the No. 2 spot for the first time in the history of the study.

Looking at the overall technology budget, 93.9 percent of c-store chains spent money in 2011 on some type of technology or automation -- more than in the past couple of years, and up from last year's 89.5 percent. Of the chains with 11 or more stores, all had a budget for technology in the past year, and 88 percent of those with two to 10 stores also reported spending on technology projects.

Budgets varied per chain size, from $47,000 to more than $4 million on average, and as in the past two years, the majority of investments were made at the store level (67 percent) vs. headquarters. This year, 42 percent of chains plan to spend more on technology compared to 2011, while 28 percent will spend the same amount, and 30 percent plan to spend less.

One expense that will continue to eat up the budget for c-store chains is payment card industry (PCI) compliance, as each year more chains report reaching overall compliance. Currently, 88 percent of responding chains are PCI compliant, and 10 percent are still in the process. This is a significant change from 2010, when only 54 percent reported compliance and 43 percent were in the process.