Should C-stores Dive Into Delivery?

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Should C-stores Dive Into Delivery?

By Tammy Mastroberte, Convenience Store News - 09/24/2018
Select Wawa stores offer delivery through Grubhub for most of the chain’s foodservice items.

NATIONAL REPORT — A few years ago, delivery from quick-service restaurants (QSRs) such as McDonalds’s or Kentucky Fried Chicken didn’t exist, and same-day delivery of any online item didn’t either. But times are changing, and they are changing fast.

With Amazon pioneering same-day delivery on a variety of items, and third-party delivery services partnering with restaurants and other retailers, consumer expectation of delivery is making its way into every market. And retailers — including convenience stores — are responding.

In the past year, the number of retailers offering same-day delivery tripled, according to the 2017 Digital Marketing Survey from retail management consulting firm BRP, based in Boston. The survey included the top 500 American retailers, with 14 percent representing grocery, food and beverage. When asked about same-day delivery in 2016, only 16 percent of retailers were offering some type of it. In 2017, that number rose to 51 percent — with 65 percent planning to add the option in the next two years.

"Third-party services like Uber Eats and Grubhub or Instacart for groceries, are making it easier for retailers to adopt delivery," Jeff Neville, vice president at BRP, told Convenience Store News, adding that third-party delivery services increased from 20 percent in 2016 to 32 percent in 2017.

Convenience store chain Wawa Inc. began a pilot with Grubhub in September 2017, and then announced it was expanding the service to more locations in January 2018. Participating stores offer delivery through Grubhub for most of the chain’s foodservice items, along with a limited number of beverages, chips, candy and desserts.

Another c-store player, QuikTrip Corp., began testing delivery in February 2017 through Uber Eats at 10 of its stores across Tulsa, Okla. Mike Thornbrugh, manager of public affairs at QuikTrip, said this is a way to test "the concept of delivery."

"It’s something we have never done before, and we didn’t really understand it, so working with Uber Eats gives us an opportunity to try it and see if it’s something we want to pursue," Thornbrugh told CSNews, explaining that QuikTrip chose Uber Eats because of its accessibility in the area. "We are going to measure the growth and how it’s being accepted by customers. It’s brand-new, so we are being patient."

The largest convenience store chain in the United States, 7-Eleven Inc., is testing proprietary delivery. It recently announced testing of on-demand ordering for both delivery and in-store pickup at select stores with its new 7NOW app. Snacks, cosmetics, gift cards, home goods, beverages and more are available for purchase through the app.

Retail consultancy King-Casey predicts that by 2023, more than half of c-store brands will offer digital ordering and delivery options. In fact, King-Casey principal and co-owner Howland Blackiston, said he doesn’t recall anything evolving this fast in the last 20 years.

"It’s like a tidal wave, and I think if we have this conversation in even two years, we will be hard-pressed to find anyone who isn’t doing it," he said. "With c-stores competing with QSRs, and both of them competing with grocery stores, everybody is trying to hop on the bandwagon. I don’t think it will take very long for it to become commonplace."

To get started, Blackiston suggests c-store operators begin by researching what delivery services are available in their area, and then compare the services in regards to pricing and what other companies they already work with.

If a chain decides to offer delivery in-house, like Casey’s General Stores Inc. does with its pizza delivery, there also needs to be technology in place to handle ordering and logistics, and staff for delivery, he noted.  

Another key consideration before diving into delivery is packaging. Retailers must look at their current packaging for food and beverages and verify that the current options are appropriate for home delivery, Blackiston explained.

"Will the food stay hot or cold? Will it spill or leak? Companies may have to source out different [delivery] packaging for their products that they might not otherwise have to do when people come into the store to purchase it," he said. 

Click below to download our full report, "Diving Into Delivery."