Shifting consumer expectations have changed the definition of convenience.
NEWARK, N.J. — In January 2018, the retail industry was abuzz over the opening of the first Amazon Go store in Seattle. This store was the first to use groundbreaking shop-and-walk-out technology.
That store opening, according to Convenience Store News Editorial Director Don Longo, prompted a growing roster of convenience store chains to implement similar cashierless payment solutions.
"Frictionless engagement is now a competitive imperative for convenience store retailers," Longo said during a recent Convenience Store News/Paytronix Systems Inc. webinar exploring frictionless checkout.
To date, c-store chains including Cruizers in North Carolina, Ricker's and Family Express in Indiana, and Parker's and Enmarket in Georgia, as well as convenience giant 7-Eleven Inc. are testing some type of frictionless checkout in their stores.
Advancements in mobile devices have paved the way for the current innovation around the way consumers shop and pay.
Kimberly Otocki, convenience store marketing specialist for Paytronix Systems, noted that mobile is a huge component of a consumers' day-to-day lives. On average, Americans spend 2.8 hours a day on their mobile devices, which accounts for 51 percent of their total digital media time.
"They are spending a lot of time on their mobile devices and we see it day to day because we know when we walk down the street or our customers come into our stores, they most likely have their mobile phones out and are using them," she said.
Mobile has become so big that the average person checks their phone 157 times a day. In addition, 90 percent of consumers use their phones inside stores while shopping.
Smartphones have changed the way we interact, the way we experience life and, because mobile devices enable consumers to get what they want in an instant, convenience views have shifted as well, Otocki said, calling it "the now factor."
The numbers speak to that. For example:
86 percent of shoppers avoid going into stores with long lines;
74 percent of shoppers will shop at a competitor rather than a store with a long checkout line; and
41 percent of shoppers will change their minds about a purchase if there is a long checkout line.
"That's a lot of customers who will gladly avoid going to your store if they know they are going to be greeted with a long line or if they go in and see a long line, they will purposely avoid it," she said. "We want to make sure our line speeds are down to make sure they continue shopping with us."
This ongoing shift in consumer expectations and their definition of convenience is driving frictionless engagement.
"Ultimately, if we are able to meet that frictionless experience — that great experience for our customers, so they don't have to wait in line and they can get all of their goods and head on the road — then that means we are going to get higher profits," Otocki said. "Our top line will increase because we are bringing more people into our stores and, hopefully, getting them to spend more money."
Amazon is the "true pioneer" of the frictionless shopping experience, according to Otocki.
"[Amazon has] shaped industries, destroyed industries and changed customers' expectations to the point that we don't really have any other option beside meeting that frictionless need that has been set by Amazon," she pointed out.
Amazon knows exactly who its customers are. The company has been collecting data, honing it and trying to figure out exactly what makes each of its customers tick. And it uses that intel to keep customers coming back.
Get Ahead Before Being Left Behind
Convenience stores need to be frictionless in order to compete, Otocki advised.
While some c-stores have already begun to adopt frictionless solutions, such as implementing mobile checkout or scan-and-go technology, more must be done in the convenience channel.
"We need to get ahead of it now before we get swamped out of the game," Otocki said.
Types of frictionless options currently in the convenience channel include:
1. Mobile ordering. According to Otocki, this is a great opportunity to bridge the gap between the physical store and the world beyond its four walls. Mobile ordering is also "super rich" with customer data, she said.
2. Scan-and-go technology. Calling this "the ultimate level of convenience," Otocki foresees this taking off a bit further down the road. It is still expensive at this point, she noted.
3. Connected cars. This service provides a greater level of frictionless checkout right where most c-store customers are — at the fuel pump. A mix of online ordering and grab-and-go options with connected cars can bring those fuel-only customers inside the store, she explained.
4. Delivery. Service via delivery allows the c-store to connect with more customers. "How do we get to that last mile?" Otocki posed.
She did acknowledge that frictionless shopping options can be daunting and challenging from an operations standpoint and a capital standpoint, and will require convenience stores to change how they do business.
"While there are a lot of different technologies out there and a lot of different things we can implement, all of these things are going to take a lot of time to really go through and make sure they are done right," she said.
Once c-store operators choose the right option for their business, they can use frictionless methods to gather customer data and more effectively market to customers. Such methods include:
Credit card token and matching;
Mobile payments with NFC;
Text to join;
Physical loyalty cards; and
An on-demand replay of the webinar, "Frictionless Engagement, Part 1: What Is Frictionless Engagement? Who Is Doing It? And Why?" is available here.