Phasing In Digital Strategy in the Convenience Channel

ALEXANDRIA, Va. — Over the past few years, convenience store retailers have ramped up their ability to have digital conversations with their customers. Now that the basics are in place for many industry players, it's time to think about the next steps.

Investment in digital is a long-term and evolving strategy that requires a programmatic approach to innovation, according to Abbey Karel, vice president of business development, convenience retailing, at Bounteous. 

"In our experience, the majority of c-stores are in the inactive or initiation phase of digital — either no digital capabilities at all or limited functionality. As brands move toward the foundation phase, you begin to see more custom platforms and a more unified experience," she said.

Karel's insights came as part of a recent webinar, "The Technology Path to Better Digital Engagement," hosted by Conexxus and presented by Bounteous on Feb. 23. 

"The acceleration phase is where it gets really exciting. This is when brands use first-party and third-party data and technology insights to experiment across web, mobile and digital marketing to orchestrate cross-channel experiences," Karel said, noting that this brings in personalized content and offers, driving higher revenue and loyalty.

As she pointed out, this leads to the fifth phase of the digital journey: innovation. "This is where technology becomes core to the brand's DNA and it becomes core to its growth strategy," she said. "Digital competence becomes a point of differentiation and brands have unique ways to engage with customers and drive incremental revenue."

For Chris Egan, chief information officer at Cincinnati-based United Dairy Farmers (UDF), digital strategy today boils down to how the retailer uses technology to make the business better and, ultimately, more profitable. This encompasses how UDF interacts with the customer — for example, mobile ordering or kiosks in the stores — as well as internally like better collaboration tools, he noted.

Circle K, the global banner of Laval, Quebec-based Alimentation Couche-Tard Inc., holds a similar definition for its digital strategy, according to Zach Andersen, director of enterprise architecture for Circle K. "We are defining these technology implementations to enable both our customers and employees to meet their needs efficiently," he said.

As part of its digital transformation, Circle K is moving technology from behind the counter to in front of the counter, Andersen reported.

The chain is "on the tail end of initiation and moving toward the foundation phase," he said of its point on the journey. Notably, the retailer is working on implementing a loyalty program in North America, and has a custom-built mobile app and a successful pay-by-plate digital program in Europe. 

A key part of using digital is measuring its impact on the customer journey. UDF looks at which channels are the most profitable and where to make continued investments. The retailer also listens to the consumer through customer feedback.

"It's important not to lose sight of your current strengths in the interest of chasing new tech," Egan said. For example, he explained that UDF's culture is rooted in community-based stores and customer-associate interaction. So, when UDF rolled out its kiosk ordering, the retailer put a lot of focus on making sure the initiative did not become a barrier for its customers.

As a result of its customer engagement initiatives, UDF has brought on project management and business analysis expertise.

The organizational chart at Circle K also has shifted along with its technology moves. The company's "stay agile" approach has helped, according to Andersen.

Along the way, its parent company's merger-and-acquisition deals as part of its growth strategy have impacted Circle K's tech stack. "Through that growth, we have acquired quite a bit of technology debt," Andersen said. "We have spent the past few years simplifying and standardizing our technology processes and we've finally reached the point where we think that, while we still have a lot of complexity and a lot of tech debt, we've been able to standardize enough to allow us to reach the end of the initiation phase and begin the foundation phase."

With the expansion of digital touchpoints, it is crucial for retailers to present a cohesive voice to the consumer. As Anderson pointed out, Circle K is trying to use loyalty and its next-generation retail platform as anchor points to get to a seamless customer experience across different channels and touchpoints "to bridge the digital and physical worlds."

Five-Year Tech Outlook

Tech advancements in the convenience channel have been accelerating and there is no sign that this will let up. Looking out five years, Egan is most excited about the growth of contactless payments — though he said he hopes it happens sooner than five years.

"We made the decision to put in contactless readers at all our dispensers as well as inside and, without talking about it, we've seen a pretty substantial portion of our customer base migrate to that for payment and it grows every month," he said.

"What's really exciting to me about this is the ability to layer on value-added services, or VAS, on top of that," Egan explained, noting that VAS is the ability to layer on loyalty to payments. He believes it is one of the biggest opportunities in the c-store space to better engage with customers.

"If somebody pays with Apple Pay at the pump and they are not a member of our U-Drive Plus loyalty program, we can pretty seamlessly enroll them. Now with every subsequent transaction, if they are paying with Apple Pay or Google Pay, we can include loyalty. We get a lot more consistent usage of it, and get a whole picture of the customer," he added. 

Andersen echoes Egan's excitement for the future of contactless. "We see contactless payments very heavily in Europe and that's the No. 1 identifier for our loyalty program," he said, adding that there are opportunities around this in the United States.

In addition, Andersen is looking forward to digital screens and advertising. "We spend a lot of money on printing posters and signs across the industry. The initial barriers to entry on costs are pretty high, but I think we've seen it and will continue to see it at pumps, at the point of sale, in the windows and on the cooler doors — everywhere that we have customers' eyeballs," he said. "I'm most excited about seeing that unique customer value prop come to life."

Alexandria-based Conexxus is a nonprofit, member-driven technology organization dedicated to the development and implementation of standards, technologies innovation and advocacy for the convenience store and retail fueling market. Its membership collaborates on key present and future industry challenges and innovations, including API development, standardizing age verification and e-commerce initiatives.