Opportunity Knocks

Convenience store retailers clearly placed a large emphasis on technology in 2013 and will continue to do so this year. According to the Convenience Store News 2014 Technology Study, 91 percent of the chains surveyed in February spent money on technology/automation upgrades last year, with the average spend reaching an impressive $1.425 million per company and the median spend totaling $100,000.

For 2014, nearly half of those surveyed (49 percent) said they expect to spend more money on technology this year compared to the prior year. Meanwhile, 29 percent said they will spend the same amount and nearly 22 percent plan to cut their year-over-year spending.

Even though tech investments may not add to a c-store retailer?s bottom line immediately, companies are clearly seeing the benefits that technology spending can have long term. However, despite these large investments, plenty of opportunities still exist for retailers, especially when it comes to consumer-facing technologies.

Take mobile apps, for example. Just 29 percent of the chains surveyed have chosen this method of reaching consumers directly, with almost 71 percent reporting they have not yet done so.

Among the retailers that do offer mobile apps, all indicated their apps contain a store locator, and 60 percent offer coupons to be redeemed in-store. Other top app features include customer feedback, loyalty program tie-ins, limited-time specials and fuel prices.

Loyalty programs are another place where opportunity knocks. Nearly 56 percent of those surveyed offer a loyalty program, but more than 44 percent still do not.

Among c-store retailers with such programs, more than 93 percent of the programs utilize a points-based or other reward-based system. More than 68 percent offer a proprietary loyalty program, 12.4 percent provide a program tied to a major oil brand, and 18.8 percent offer both.

Although social networking is becoming a more mature technology, it is yet another avenue some c-store retailers have yet to take. Approximately one-third (32.3 percent) of those surveyed still do not use social networking to connect with customers.

For the two-thirds that do have a social media presence, Facebook is used by nearly all (94.2 percent), followed by Twitter, foursquare, Instagram, Google Plus, MySpace, Pinterest and Tumblr. When posting to these sites, more than 80 percent of c-store retailers place an emphasis on promotions and events, with contests and questions for members also being a strong focus.

MOBILE WALLET GROWTH

When it comes to point-of-sale (POS) payment systems, the mobile wallet is easily the biggest year-over-year growth story. Thus far in 2014, 7.8 percent of c-store retailers reported accepting this technology in-store, vs. 2.1 percent in 2013. At the pump, the growth is similar with 6.5 percent accepting mobile wallets today, compared to 2.3 percent last year.

Inside the store, mobile wallets appear to have gained share at the expense of electronic check verification, prepaid/stored value cards, electronic benefits transfer and RFID, which all saw usage declines of more than 1 percent year over year.

At the pump, it?s much more difficult to determine where mobile wallets gained share as several other forms of payment also saw increases in usage. The exception is cash acceptors, which declined by 0.8 percent.

Not surprisingly, credit and debit cards remain the No. 1 payment acceptance method both in-store and at the pump. All c-store retailers that participated in the 2014 CSNews Tech Study said they accept credit/debit cards in-store, while 96 percent accept credit at the pump and another 58.6 percent accept partial debit authorization at the forecourt.

For the second straight year, CSNews asked survey participants if they accept biometric payment. This technology, often requiring the acceptance of a fingerprint to pay for goods at the POS, has been cited by some experts as a more secure technology than magnetic stripe cards and Europay, MasterCard and Visa (EMV) chip-and-PIN and chip-and-signature cards. Despite this, no respondent is currently using biometric technology in its stores.

POS INTEGRATION

Most respondents to this year?s study offer debit/credit authorization and scanning at their store locations. Nearly 89 percent of respondents offer credit/debit authorization, with approximately 77 percent of them integrating it with the POS. Roughly 85 percent offer scanning services, with all survey respondents integrating it with the POS.

Safes and money-order terminals are also prevalent among c-store retailers, with more than 80 percent using safes and more than half providing money-order terminals.

For those companies that sell motor fuel, every respondent said they have a fuel pump, with 72 percent saying they integrate the pump with the POS. Pay-at-the-pump technology and tank monitors also remain quite popular, with four out of five retailers having each service.

Fleet services are offered by nearly 60 percent of respondents, while car washes are present at just under half (48.5 percent) of those c-store retailers surveyed.

BUSINESS INTELLIGENCE

As convenience store retailers continue to collect valuable data at the POS, use of business intelligence (BI) software continues to grow. Slightly more than three-quarters of respondents are currently using some type of BI software.

What do operators look for when utilizing business intelligence? Sales and category performance ranks first, as 73.6 percent of respondents cited this as the top reason to use BI. This represents a 4-percent increase compared to the retailers citing sales and category performance last year. When broken down by chain size, this figure rises to 77.6 percent for larger chains.

Store performance ranks second at 66 percent, followed by loss prevention and detection, vendor management, marketing/promotion effectiveness, and inventory and in-store optimization.

VIDEO STEPS FORWARD

More than 80 percent of this year?s study respondents use promotional/sales technologies, a 1.5-percent increase year over year. This growth is led by video monitors.

Nearly 48 percent of operators now offer video monitors in-store, a 6.5-percent increase vs. last year. Automated loyalty programs and text messaging to customers are also growing as in-store promotional tools, while satellite-fed audio music/advertising declined.

The story is much different at the pump, where video monitors are now offered by 33.4 percent of respondents, a decline of 1.5 percent. The beneficiary is advertising/couponing at the pump, now offered at 38.2 percent of participant stores, a gain of more than 5 percent compared to 2013.

KIOSKS STAND TALL

Kiosks can provide a wealth of convenience for customers, and their use is clearly growing at c-stores. Kiosks with car wash automated payment systems, prepaid cards, job applications, advertising/couponing through ATMs and outdoor foodservice ordering all grew by more than 1 percent year over year.

Perhaps due to solid growth in outdoor food ordering, kiosks performing this service inside the store declined. Bill payments also suffered a decline of 0.9 percent.

As consumers? lives continue to get busier and busier, it?s safe to expect more c-store operators to install these devices at their stores in the coming years.

LOOKING AHEAD

Security is top of mind for convenience store retailers following the recent high-profile data breaches that occurred at several retailers including Target Corp. and Neiman Marcus. (The CSNews study was fielded after news of the Target breach first broke.)

Retailers cited reducing theft/shrink as the No. 1 area for technology spending this year. Fifty-four percent of respondents said they plan to spend on technologies that thwart theft this year, a significant rise compared to 47.6 percent in 2013 and just 30 percent in 2012, when theft/shrink reduction technologies ranked No. 6 on retailers? tech spending lists.

Also top of mind this year is better management of store-level inventory/revenue and social media, which ranked No. 2 and No. 3 among planned technology investments in 2014, respectively. More than half of survey respondents said they will spend money on these two areas this year. All other spending categories trailed far behind.