ALEXANDRIA, Va. — Two years after COVID-19 all but shut down the country, inflation and rising gas prices are battering consumers as retailers look for ways to regain their footing. Help could come in the form of mobile technology, according to a recent industry webinar.
Don Frieden, CEO of Houston-based P97 Networks LLC — a provider of secure, cloud-based mobile commerce, in-vehicle payments and digital marketing solutions to the convenience store industry — noted that inflation and pent-up demand are driving increased sales across the industry. Retailers are seeing higher margins from fuel as well, but also higher direct store operating expenses.
The effects of inflation can be seen across many categories. Since 2019:
Tobacco costs are up 14.9 percent;
Food away from home costs are up 13.2 percent;
Beverage costs are up 7.3 percent; and
Center store costs are up 8.4 percent.
"Consumer confidence also continues to fall. We are almost approaching the lowest levels in 25 years," Frieden said.
At the same time, convenience retailers are competing for volume through enhancements in store environment, design, inside offerings (such as foodservice, private label, CBD and gaming), and mobile platforms.
Now more than ever, c-store operators need to position their locations as a destination, Frieden stated during a Conexxus-sponsored webinar on the "State of Mobile Commerce in Convenience and Fuel."
Making the Case for Mobile
"Consumers are interested in using mobile devices to find locations and transact at [convenience and fuel] locations," Frieden said, noting that P97's mobile transactions have grown 6.8 percent since January 2020.
Monthly mobile transactions per user are also up. Mobile comes in around three transactions per month, compared to data from the card companies that shows 1.6 to 1.8 transactions per month for the same fuel brand.
"These will be your most loyal customers once you get them converted to a mobile app," Frieden said.
In 2021, NACS reported that the top 10 percent of convenience channel retailers saw fuel margins of 40.36 cents per gallon, which was 26.9 percent higher than the bottom 10 percent of retailers even though top performers priced fuel 8 cents per gallon higher. This suggests top performers are “better able to target discounts integrated with payments,” he explained, noting 69.5 percent of fuel sold on the P97 mobile platform in 2021 was discounted. Gallons purchased per fuel transaction on mobile come in at almost 12 gallons.
Inside the store, NACS data puts the average basket in 2021 at $7.59. Whereas, mobile transactions are running an average of $12.50.
"We understand the impact of providing coupons or digital offers to drive more c-store conversion, but also to drive a larger basket," Frieden said. "Also, we noticed that users are growing faster than gallons consumed. What does this mean? We are driving more inside growth with those same consumers."
This is a switch from pre-pandemic days. Before the onset of COVID-19, user growth equaled gallon growth, meaning users were using mobile apps for mostly fuel. Now, inside sales are 10.3 percent of all P97 platform mobile sales, or dollars spent.
Where Can Mobile Go From Here?
Mobile is already driving retail innovation across the convenience and fuel retailing industry, according to Frieden. But more lies ahead.
“When you start thinking about mobile payments, it is more than just thinking about replacing card swipes, but actually allowing consumers with smartphones or connected cars to make payments for fuel or EV [electric vehicle] charging or even merchandise,” he said.
Mobile payments are also moving toward voice-activated payments in virtual systems, he noted, and payments with super apps like Venmo are becoming popular as well.
Additionally, mobile platforms can help convenience retailers with the energy transition by replacing fuel-focused experiences with EV charging and hydrogen fueling experiences through mobile apps and connected cars, leveraging a technology-driven, customer-focused approach, and putting convenience in the palm of the customer’s hand.
EV charging is a new category that P97 is focused on. This comprises payment; loyalty rewards and targeted offers not only for EV drivers, but also for fleet platforms as more fleets move toward EV; and billing, subscription and roaming services.
Mobile is also evolving into digital storefronts, replacing point-of-sale systems with order ahead and curbside pickup capabilities; user-friendly, customized digital experiences; and connected car experiences. Mobile is replacing physical signs with digital marketing, too.