While You Were Sleeping ...
Don't let a highly functional format get in the way of change and innovation.
What About the C-Store?
In recent years, I have started working on a number of convenience store projects. As different as convenience and grocery are, I see some of the same fixed attitudes, beliefs and self-confidence in the convenience store industry today as I saw in the grocery industry back in the 1990s.
For decades, convenience stores have been able to succeed with a highly utilitarian, functional and overtly literal formula: a simple box, the signature hot dog roller grill, refrigerated doors with beverages in the back, snacks, general merchandise and cigarettes behind the counter. This model has worked well for the industry for many decades and, admittedly, it’s hard to find fault with a formula that keeps paying dividends. So why shouldn’t we just keep doing the same thing?
If you look closely at the convenience store space, as my researchers and I have, you cannot help but notice many outside players—including smaller-format grocery stores, fast-food chains, quick-service restaurants, dollar stores and drug stores—actively looking at your business model and seeking a piece of your action and market share. While none of these outsiders has emerged as a major threat yet—in fact, some have failed—they will keep coming and improving their game. They are not going to compete with you in the same way other c-store brands competed with you in the past. They are coming at this market with an admittedly new and fresh perspective, a unique approach and a different food and retail philosophy. They are looking for missed opportunities and holes in your strategy, and they aim to exploit them. They will try to do all those things you say you won’t do or that can’t be done, whether that means creating merchandising desire at the storefront, offering healthy and delicious food options, developing comfortable cafe-style seating areas or finding exaggerative ways to attract female audiences (even if that means alienating some men).
I am pleased to say some in the c-store channel (yes, I saw CSP’s cover story on Wawa last month) are embracing change.
But I would respectfully submit that the traditional convenience store model may be fast approaching its own peak. The telltale signs are there: Too many convenience stores are rigidly fixed on their highly efficient formats and formulas, and seem unwilling to consider changing food options and store experiences if it even minimally affects their profit margins/efficiency models. Interestingly enough, many convenience store executives we speak to can even see the changes taking place in society. Yet the industry, despite modest product and design improvement, has still barely moved from its stereotypical form, shape, model, product mix, merchandising approach, meaning and overall experience.
That Joke Isn’t Funny Anymore
Let’s face it: If we’re all really honest with ourselves, we’d probably have to admit that many convenience stores out there have become a cliché. And that gives rise to the jokes. For ample evidence of this, just look at the way convenience stores have been portrayed in films (as far back as “Bill & Ted’s Excellent Adventure”), TV shows (“The Simpsons”) or talk shows (“Dr. Oz”). Hearing the joke is one thing; understanding what it means, why it is happening and what to do about it is something else altogether. It’s time to tear down the stereotypes.
A stereotype is society’s way of sending you a message. Most people struggle to digest these messages, because they’re actually indirect. But if we’re not attentive, we as a channel risk becoming not only the continued butt of people’s jokes, but also something far worse: irrelevant.
While it would it be difficult in one article to describe every relevant social movement taking shape in consumer society today, I can broadly highlight four key areas I believe will affect the convenience industry for the next several years.
- The Experience: When we were kids, the idea of being able to enjoy a well-designed experience was something usually reserved for the privileged and the better off. Today, we all want the “good life” and expect it, from places such as Panera Bread, Starbucks, Target, IKEA and the Apple store. Even discount-priced hotel chains such as Holiday Inn, Fairfield Inn and Motel 6 are getting in on the game of highly designed experiences.
Not all retailers have gotten this memo. Many—such as Subway, Best Buy, Sears and Radio Shack—have been standing on the sidelines, waiting for their pragmatic, functional, price-driven consumers to return. Given the choice, today’s consumer prefers to shop at places offering a better experience (even Walmart is concerned about this). Everywhere you look—from toothbrushes to refrigerators, phones to pickup trucks— brands have used design to substantially improve their experience, making them more attractive, seductive and engaging.
Far too many c-stores have resisted creating new kinds of experience, either dismissing them as unnecessary or unconvinced in their ROI. Many instead prefer to “decorate” their box with what they hope are more aesthetically pleasing colors, stripes and banners. Today’s consumer expects something much deeper, more profound and often more radical than just dressing up the traditional c-store experience. Consumers are looking for something that breaks the stereotypical mold and speaks to a better idea of what “convenience” really means.
- The Meaning: For a long time, fast food enjoyed an incredibly prosperous ride upwards. But in recent years, we’ve seen many traditional fast-food concepts peak, and even begin to show signs of fatigue or potential decline. For better or worse, consumers started forming strong opinions, ideas and associations about fast food, egged on by movies (such as “Fast Food Nation”), media figures (Dr. Oz) and books (Michael Pollan’s “Food Rules”) that are highly unflattering to the industry. Scientific studies and policy reports are constantly in the news today, suggesting links between fast food and adverse health. Once-loyal fast-food consumers are now considering migrating to alternatives.
To break free from their stereotype, McDonald’s has gone to great lengths to change its meaning. While “meaning” sounds like a lofty word, it actually has a specific business purpose. By meaning, I am talking about the symbols a retailer communicates and the categorical buckets we place them in. Shifting perceptions didn’t happen overnight for McDonald’s; it has taken many years of effort, experimentation and, yes, I dare say, mistakes. After its adaptation efforts, which included new menu items and store redesigns, McDonald’s has finally been able to pull itself out of the typical category of “fast food.”
McDonald’s has shifted its brand’s meaning, leaving behind competitive operators such as Burger King, Jack in the Box, Taco Bell and Wendy’s. And most important, it has won back a highly critical audience of mothers, who can now see some healthy options there. Meanwhile, the stereotypical fast-food competitors—originally skeptical of McDonald’s efforts—find themselves late to the dance and trying to play catch-up. Some of these brands have resorted to courting their only remaining loyal audience: irreverent juvenile men. But even this audience is showing signs of flight for, believe it or not, more healthy options.
When an industry, brand or concept becomes a stereotype, consumers stop thinking about it. They know exactly what to expect. This is not only problematic for the category of “fast food,” but for convenience stores, too. Increasingly, many groups of people— especially women, children and professionals—would never even consider c-stores as an option for certain products. The stereotypical images they carry with them, formed over many years, don’t allow them to see the c-store in another way.
Changing meaning begins with tangible change, such as reworking the typical box, redesigning standardized interiors and rethinking product choices. While some of you have embraced this change, there remains incredible resistance within much of the c-store industry, in large part because change requires altering the tried-and-true operational formulas convenience stores have always relied on.
- The Choices: In the past, if you traveled by airplane and got hungry on your layover, there weren’t many options for eating at the airport. If you actually liked Saran-wrapped ham sandwiches with condensation on the inside turning your bread into a soggy mess, you were in luck. But if you didn’t eat meat or were on some kind of healthy diet, you were out of luck. Today, airports rival high-end shopping mall food courts and, in some cases, restaurant row. And in general, our choices for places to eat are more abundant and of higher quality, too. Society has demanded it. The same higher-quality options found at airports today are also found at college cafeterias, some fast-food restaurants, theme parks and even movie theaters.
For generations, c-stores have succeeded by offering a limited assortment of expected products to a relatively reliable stream of customers. While many c-stores are just beginning to offer new food choices, I fear most new offerings aren’t nearly ambitious enough. In short, c-stores aren’t vanquishing their stereotypes. They are instead just back to tweaking or slightly improving the old game.
Consumers today are seeking more control of their food choices. What once seemed like the radical fringe (e.g., gluten-free, vegetarian or Paleo diets) is fast becoming the norm. More and more people are using food to feel better, look better and live longer, healthier lives. Regular people are increasingly disenfranchised by the worlds of economics and politics, but one advantage of our modern age is that you can always take control of your personal health and live better by eating better. Unfortunately, many convenience stores are so far behind this new consciousness that I sometimes worry they may never catch up.
- The Conversation: Chipotle should be considered a fast-food joint. But amazingly, consumers don’t stereotype the brand with this less-than-flattering label. Why not?
Part of the reason Chipotle has been able to categorize itself outside of “fast food” is because it has tapped into a highly relevant social conversation about food that is in line with the values of its targeted audience. While Chipotle is concerned with profit and efficiency, it also devotes time and energy talking about food sources, food networks and food policies. More important, it finds compelling ways to tell consumers about its beliefs and practices. In other words, Chipotle takes a stand on certain issues and puts its values out there for review—and potential criticism. Despite the risk, consumers end up supporting and admiring Chipotle for standing up for what it believes in.
What is your value proposition? What conversation are you having with your customers? How are you positioning yourself as not just a merchant of stuff, but an enterprise with a mission, purpose and relevance?
While my comments about the c-store industry may sound incredibly harsh, my interest is to engage in a conversation and to buoy our channel so that we don’t suffer the setbacks the grocery channel is experiencing. Convenience stores own a legacy of success, and the present is a critical moment to adapt to a new world of consumer tastes. Grocery stores missed the boat, but you don’t have to.
Adapt and Evolve
- How can retailers create their own adaptation formula?
- Recognizing that retail is fundamentally about creating change (in order to create a competitive advantage).
- Believing in the idea that retail can actively create new kinds of consumer desire.
- Constantly building and preparing your organization to embrace new modalities of change.
- Creating a discipline in your organization focused on change (and not wildly swinging for the newest fad or the latest trend).
- Figuring out ways to create systems within organizations that can sense social shifts and feel out emerging movements.