Data warehouses and data lakes enable real-time ingestion of structured and unstructured data. Data normalization and visualization allow operators to view their entire operations in a single interface. Natural language processing (NLP) tools enable all employees to operationalize data. Integrated managed detection and response (MDR) cybersecurity solutions allow c-store operators to focus on their business without the complexity or responsibility of integrating, operating and maintaining disparate technologies.
Convenience store sector faces challenges from all sides
The fundamentals of the c-store industry are changing. Cigarette sales are being cannibalized as customers increasingly discover e-cigarettes and other alternative products. Not only do 46% of store operators expect cigarette sales to continue to decline this year, 62% also believe unit volume will continue to decline.
On the fuel side, improved fuel economy from newer cars and the continued advancement of electric vehicles are dampening fuel demand. Total c-store fuel sales declined by $532.2 billion in 2023, and although fuel sales accounted for just over 67% of c-store revenue, they generated less than 39% of profits.
The challenges facing c-store brands are not limited to problems within different product categories. Customer behavior and expectations are also changing. Operators are reporting declining footfall and facing increasing competition from other retail sectors, including grocery stores, discount stores and quick-service restaurants. And the myriad challenges these industries face – from finding new ways to increase customer loyalty to protecting customer data from increasingly sophisticated hackers – are also challenging c-store brands.
Taken together, these factors suggest that a re-engineering approach is necessary, but for many c-stores, it could be a difficult path. Technology will play a central role in shifting store offerings away from struggling categories and increasing footfall through a more engaging store experience. Unfortunately, c-store brands often lag behind when it comes to technology. For companies that have not yet built a solid technology foundation, an industry re-engineering approach could significantly overwhelm and perhaps even exceed the capabilities of today’s existing technology architecture and tools.
The role of technology in the c-store evolution
To anticipate changing consumer buying behavior and product category disruption, c-stores must rethink their operations. Developing capabilities around the expanded and more complex application of data analytics will enable store operators to use data more effectively.
Basic questions like “Why does one store significantly outperform another store with similar inventory, demographics, and customer traffic?” cannot be answered without insight into what’s happening in the store.
Computer vision solutions that were once used for fraud detection are now also being used to measure employee performance and store operational efficiency, potentially allowing store owners to mitigate some of the impact of rising operational and labor costs. Instead of being weeks (or possibly even months) behind the data curve, c-store operators with the right tools can analyze current data and quickly take action based on those insights to better control costs.
Technology also enables c-store brands to leverage opportunities with artificial intelligence (AIOps). These innovative tools enable targeted automation to offset increased labor costs and eliminate manual, repetitive, or time-intensive tasks, freeing up staff for other activities. AIOps can also improve operations by anticipating and resolving problems before they occur. A well-crafted technology strategy leads to a better understanding of store-level performance and the ability to use resources most efficiently.
However, these advanced technologies need the right environment to function correctly and safely. New technologies such as AI and machine learning (ML), as well as Internet of Things (IoT) devices such as appliance sensors, are becoming more common in the c-store sector. For example, to understand where there are opportunities for energy efficiency, you need the technology to monitor your refrigerators. To provide a visually stimulating shopping experience, you need to employ digital signage that is easy to update. Equally important is making sure you control access to all of these resources, and this requires cybersecurity protections.
Design your business strategy to better leverage technology
Now is the time for c-store operators to align their business strategy with technology to encourage customer loyalty and take advantage of new opportunities to control costs and increase sales. A clear focus on the significant benefits of convenience starts with making each location inviting and efficient to attract and delight customers. One example is using digital signage to create a bright, engaging and more modern environment that draws people into the store and engages them. With digital solutions, operators can leverage strategies that include delivering personalized loyalty messages and directing shoppers to alternatives when in-demand items are out of stock.
Effectively implementing and leveraging these technologies can be challenging for companies that lack the necessary resources and expertise. This is where a managed service provider (MSP) can make all the difference. By finding an experienced MSP partner, c-store operators gain access to the latest technological insights and support. An MSP will work with you to implement cybersecurity measures that protect your network from intruders. You’ll also receive guidance to help you confidently navigate the next phase of c-store evolution, including deploying innovative technologies that complement your existing staff, bring shoppers back to the store, engage new customer segments, and provide insight into your operational health.
Dan Rasmussen is Senior Vice President and General Manager of the North America Enterprise Division at Hughes Network Systems. He is responsible for leading the organization that supports Hughes’ corporate, small business and government clients. He has been with Hughes for more than 27 years. Rasmussen holds a Master of Business Administration, a Master of Science in Electrical Engineering and a Bachelor of Science in Electrical Engineering from the Georgia Institute of Technology.
Editor’s note: The opinions expressed in this column are those of the author and do not necessarily reflect the views of News from the convenience store.
