Categories: Retail

Renewed Energy Around Convenience Stores As DashMart Joins The Fray

Millions of Americans regularly trade a more involved supermarket excursion for the grab-and-go handiness around which convenience stores are designed. Did these savvy operators imagine that the tech disintermediation scene hadn’t noticed them? Well, they did.

Now, here comes DashMart. It’s a convenience store on wheels. That’s likely to disrupt the sector a bit.

With mobile order-ahead aggregator DoorDash unveiling its plans this week for an eight-city rollout of its new DashMart mobile convenience store concept, some see it as the first salvo in a new battle between legacy convenience store titans like 7-Eleven and tech trespassers intent on remaking this market to their mobile/digital-first liking, as they have with everything from taxis to television.

Credit the COVID-19 shift — digital and otherwise — with a renewed interest in convenience stores. Just as businesses are reevaluating supply lines, consumers too are considering their own retail mix, and figuring out where convenience stores fit into their reformulating post-pandemic lifestyles.

The National Association of Convenience Stores (NACS), as quoted in Food Navigator, reported in April that over half of convenience stores are reporting more grocery sales since the pandemic hit, and that “… c-stores are pivoting to provide more fresh items and products that can be brought home to consume as part of a meal.”

Supplementing a model of snacks typically consumed in an hour or less with grocery items destined for home dinner tables sustained some quick-service restaurants (QSRs), full-service restaurants (FSRs) and fast-casual eateries during lockdowns. For some, it’s sticking.

So, now, it’s more of a showdown, as players stake their territory on the digital convenience store map.

New Consumer, New Convenience Store

The digitization of convenience stores actually began years ago. This category essentially invented a “mobile” food concept before drive-thrus (never mind smartphones) were ubiquitous. Convenience stores also helped pioneer faster POS terminals, among other retail innovations.

But with coronavirus contagion fear having changed consumer habits rapidly and thoroughly, convenience stores are in much the same boat as others with a heavy physical retail exposure. Rather than slow their roll, such stores are testing and learning with new concepts and offering the best of both worlds.

A good example is Wawa Inc., whose 900 convenience stores are watching what happens when just one special new Wawa location opens by the end of 2020. When finished the store will literally expand the meaning of “drive-thru” as customers remain in-vehicle while they shop.

“Wawa continues to test new store concepts with this latest drive thru format, providing an opportunity for our customers to still experience and enjoy their favorite Wawa products while remaining inside their vehicle. It is critical to provide new ways to access Wawa, increase convenience and provide new options for service,” Terri Micklin, director of construction at Wawa, said in a statement.

Other innovations around touchless convenience stores involve voice commerce. Segment leader 7-Eleven debuted its new contactless program in late June. “A new voice commerce technology, developed internally, allows customers to pay for fuel through the 7Rewards loyalty program found in the 7-Eleven app by using mobile payment options or Siri shortcuts,” PYMNTS reported at the time.

PYMNTS also noted that 7-Eleven “said it’s the first retailer to offer voice commands to pay for gas. It is starting in the aforementioned test markets and Apple devices and will quickly roll out nationwide and to Android devices.”

Voice Commerce Fuels Up

The convergence of fuel, food and phonetics couldn’t have picked a business more redolent with Americana than the gas station to anchor their moves into connected voice commerce.

On Aug. 3, Seven & i Holdings Co. agreed to purchase the Speedway chain fuel stations owned by Marathon Petroleum Corp. for $21 billion, as reported by Bloomberg. Tokyo-based Seven & i Holdings Co., estimated to be the world’s largest franchisor of convenience stores, previously used $3.3 billion to purchase Sunoco LP fuel locations and convenience stores in 2018.

In a recent conference call for Speedway acquisition, Seven & i Holdings Co. CEO Ryuichi Isaka said, “This is a historic first step as we seek to become a global retailer.” PYMNTS reported that “the arrangement is said to be the largest to date for Seven & i and the second-biggest buy of a target in the U.S. in 2020.”

Talk of voice commerce and the gas station started at the 2020 Consumer Electronics Show in Las Vegas, as Fiserv surprised attendees with news of a connected voice pilot involving ExxonMobil, Amazon and Fiserv allowing drivers to say “Alexa, buy gas” as they pull up.

Speaking with PYMNTS CEO Karen Webster immediately after that public briefing, Fiserv Head of Global Digital Commerce Nandan Sheth said, “We think a lot is going to happen and we are going to stay laser-focused on the connected car and expanding what it is capable of offering.”

“Just looking at the apps that [Fiserv] powers, mobile order-ahead went from being 2 or 3 percent of their business two years ago to being 8 or 9 percent coming from the digital channel,” Sheth told Webster at the time of the announcement.

“These are transactions that until very recently were face to face and done with a card and I think we are just seeing the start of that growth, we are nowhere near that leveling off.”

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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