The Self-Service Renaissance

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The Self-Service Renaissance

By Ulrich Seeman, Diebold Nixdorf - 11/13/2019

In 1964, the first self-service gas pumps were introduced to American consumers. Twenty years later, the proliferation of credit cards and advances in technology allowed customers to pay for their gas right at the pump.

Store owners were initially reluctant to adopt this innovation because they feared in-store purchases would decline if customers didn’t need to come inside to pay for gas. The opposite proved to be true: sales went up because the ability to pay at the pump shortened lines in-store, which made for a better shopping experience.

Fast forward another 30 years, and fuel and convenience stores are having a renaissance. Convenience and local availability are key priorities for the modern consumer, and large retailers are creating small-format stores to adapt to this trend. These smaller pop-up shops speak to the broader direction of the industry, which is inspired by the convenience store model.

With this revival comes a massive opportunity to maximize revenue growth, and c-store operators are on the cusp of a new self-service transformation. This time, at the checkout inside their stores.

An Expected Amenity

While consumer trends shift over time, shoppers consistently value ease and efficiency a.k.a. convenience. In many modern retail environments, self-checkout has become an expected service.

A 2015 Consumer Reports survey found that three-quarters of subscribers used self-checkout at the grocery store within the past year, and nearly three out of four “applauded it as a time-saver.” A more recent poll indicates that the preference for self-checkout is a steadily growing trend: 73 percent of shoppers surveyed indicated they would rather use self-service technology like the self-checkout than engage with store associates — a 10.6 percent increase from the previous year.

Younger consumers in particular are more comfortable using technology that enables them to be self-sufficient, and they are often surprised when these options are not available in a retail setting.

Given the increasing adoption of and preference for self-checkout, it’s no surprise that more c-store operators are looking to implement or learn more about self-service. The 2019 Convenience Store News Technology Study found that while only 11 percent of respondents have already added a self-checkout solution to their stores, a whopping 33 percent plan to add this convenience in the near future.

With more shoppers expecting self-checkout options, convenience stores must adopt this technology in order to keep pace with demand and maintain customer satisfaction.

Integration as an Enabler

The integration of enhanced self-service devices presents opportunities for in-store efficiency by providing an all-in-one solution. Integrating advanced payment processing systems is cheaper and easier than ever before, enabling retailers to focus on providing a seamless customer experience and allowing consumers to spend less time in the checkout line.

C-store operators can’t afford costly, time-consuming integrations and they no longer have to. Speed-to-market is critical in providing consumers with the experience they have in other retail environments, and advancements in integration have created simple, affordable solutions.

Foodservice: A Massive Growth Opportunity

Foodservice is the fastest-growing profit center for the convenience industry, and self-checkout represents a significant opportunity for c-stores to compete in this category, where market leaders are increasingly experimenting with the technology.

Consider McDonald’s. The food chain is a prime example of self-checkout success in foodservice. In 2018, McDonald’s announced plans to install self-service kiosks in 1,000 restaurants each quarter over the course of two years. CEO Steve Easterbrook reported that kiosks tended to result in higher average checks, as people selected more items from the digital displays than they would at a counter staffed by a cashier.

McDonald’s has invested heavily in tech innovations, including automation and artificial intelligence. There are many opportunities to transform the customer experience and boost profits in addition to self-checkout.

Incorporating self-service opens up a massive opportunity for c-store operators to maximize their revenue growth capabilities by enhancing their fastest-growing profit source. According to the 2019 Convenience Store News Industry Report, foodservice accounts for more than 16 percent of in-store sales, and its share of in-store sales has grown steadily over the past decade.

Integrating order and payment functions into one kiosk can substantially increase the speed of checkout. For customers who want to come in, grab a snack or drink and get back on the road, self-checkout drastically reduces the time it takes them to get in and out.

It also allows stores to deploy their employees where they’re needed most, such as food preparation or purchases that require age verification. This gives retailers a stable method for increasing sales while maintaining staff and stabilizing labor hours — addressing one of the largest costs a retailer faces. Self-service enables c-store operators to complete more transactions without changing hours. Given the serious lack of flexibility with staffing in the convenience industry, this is key for maximizing efficiency and revenue growth.

With a self-checkout option, “grab-and-go” customers don’t have to wait in line behind those who need an employee’s input to complete their transactions. This provides a better customer experience, which is key to strengthening customer loyalty. It also maximizes businesses’ efficiency and, in turn, their profits.

Fifty-five years ago, forward-thinking business owners in the fuel and convenience industry introduced self-service and revolutionized the way customers purchase fuel. With the introduction of pay-at-the-pump capabilities, operators generated higher in-store revenues thanks to the improved shopping experience. Today, the industry is on the verge of a similarly transformative opportunity.

By utilizing self-service, convenience store owners can leverage consumer trends, boost efficiency and evolve to serve today’s customer — and also the customer of tomorrow.

Ulrich Seemann is Diebold Nixdorf’s business development lead for service stations and c-stores. In this role, he drives and develops the North American c-store business, including defining and developing market-specific solutions such as EMV and transaction services, customizing existing solutions, acquiring and developing new consumers, engaging the direct and indirect sales teams, designing market entry and market development strategies, funnel management and reporting.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.