From driving food sales with kiosks and tablets to avoiding interchange fees, retailers share advice from their own experiences.
The 2015 National Advisory Group (NAG) Conference kicked off on Sunday, Sept. 13, at the Eldorado Hotel in Santa Fe, N.M.
On Monday, guests attended two educational sessions on reducing swipe fees, and benefiting from foodservice technology, before embarking on a golf outing and free time to explore the city.
Monday morning, John Lofstock, the executive director of NAG and editor of Convenience Store Decisions magazine, addressed attendees, to outline the growth the organization has seen.
“The National Advisory Group continues to grow and attract some of the best convenience store operators in the country. We have 55 chains representing more than 25,000 convenience stores at this year’s conference. We have 17 new chains and more than 170 registered attendees,” he said. NAG is also continuing to grow its reach with young executives, via its Young Executives Organization (YEO), which brought more than two-dozen young executives to this year’s conference.
Swipe Fee Solutions
In a session titled, “How to Boost Profitability By Reducing Swipe Fees,” speakers explained how swipe fees are impacting c-stores, and what they are doing to reduce their monthly interchange fees.
The convenience store industry paid $11.4 billion in card fees in 2014, $1 billon more than its reported pretax profit of $10.4 billion, pointed out Ed Collupy, executive consultant, W. Capra Consulting Group.
Jeremie Myhren vice president of information technology for Road Ranger, which currently has 35 travel centers in the mid-continental U.S., noted credit card issuers are upping the ante to build customer habits, from offering 5% off gas when they use their credit card, to huge sign up bonuses.
“The Durbin Amendment was not a silver bullet,” Myhren explained, noting that retailers continue to see PIN-enabled debit related transaction fees increase outside the regulations of the Durbin Amendment. In other words, fees, such as merchant participation fees, that don’t violate the Amendment are now being added.
As credit issuers continue to add new rules and fees, it’s important to have someone on staff monitoring this.
Decoupled debit, which is widely used in the c-store industry is one solution for merchants. “The fee is nominal and is much closer to the cost of accepting a check compared to the cost of accepting a credit card,” he said.
“At Road Ranger our philosophy with this is that to incent customers to get this card, you have to give them something. So this isn’t a money-saving proposition, but more a way to build a stronger relationship with customers. We’re going to pay for interchange anyway, so instead let’s give that money back to the customer via decoupled debit. So the customer now associates us with the discount. Instead of Discover taking care of them, Road Ranger is taking care of them.”
Decoupled debit can be positioned as more secure than alternatives, and can also fill the gap sometimes filled by loyalty programs. The program has also allowed Road Ranger to capture customer email addresses, which they can now use to communicate directly with the customer.
“Some 10-20% of our card using customers are now being rewarded by us instead of credit cards,” he said.
Jenny Bullard, chief information officer, for Flash Foods, which operates 168 stores is Georgia and Florida, shared some of Flash Foods’ solutions to the interchange problem.
After launching its loyalty program in 2005, Flash Foods added the GoBlue ACH payment card in 2008 and a mobile app with mobile pay in October 2013.
As part of its loyalty program, customers get two cents back whenever they use their loyalty card, and that money can be used to pay for anything from gas to in-store products. The program also includes beverage clubs, where after every 10th coffee, they get the 11th free—same with fountain and frozen. There is even a discount with cigarettes. Some 54%-64% of cigarette purchases are made with the loyalty card, as the more packs customers buy the bigger discount they get.
From January thru June 2015 GoBlue saw, $23,000,000 transaction dollars, (inside and out) and $461,000 dollars were given as discounts on fuel.
“We aren’t saving money, but our customers are saving money and associate that with Flash Foods and we’d rather give that to our customers than credit card companies,” Bullard said.
Flash Foods added a mobile payment option to better market to Millennials and to add value to its existing loyalty program. It also promotes ACH payment through GoBlue to reduce credit card swipe fees. As part of the app, customers can also opt into digital coupons, thus getting even more value. When customers are ready to pay, GoBlue Mobile just needs his or her email address and four-digit pin number to provide a seven-digit code the customer enters at the pump or in-store to pay.
Driving Foodservice Sales
In a session titled, “Driving Foodservice Sales Through New Technology,” retailers explained how new technology is transforming the foodservice business.
Scott Zaremba, president of Zarco USA spoke about the Siris tablet pay-at-the-pump program he introduced onto existing fuel dispensers to allow customers to order sandwiches while they pump their gas.
“Some 87% of my customers pay at the pump,” he noted. Because people don’t like to give their email addresses, the program takes phone numbers. The tablet takes less than four minutes to install. With no advertising, 3% of Zaremba’s customers are already purchasing food via the tablet.
When it comes to foodservice, Ed Burcher, president of Burcher Consulting Inc. noted it’s not when you are going to do it, but how and with what partner. The same, he said, goes for kiosks. “Technology when done well, can drive your sales,” he said.
Shannon Harvey, foodservice program manager for Ricker Oil Co. talked through the challenges and details involved in adding a touchscreen program for foodservice.
“It takes structure, planning, someone to know how to plan it and it takes time,” Harvey stressed. She noted that while most retailers want things done yesterday, taking the time to test the flow of your touchscreen program before rolling it out is key.
At its 53 stores, Ricker’s offers a burritos program that includes, salads, tacos, eight different carriers, and six different proteins, and just using that many items requires many steps to implement a touchscreen kiosk program.
“A test lab is a must when using a kiosk. We learned the hard way. We put it in the store and realized this doesn’t look or flow right. So now we have a test lab so we can look at it and make sure the flow is right,” she said.
Touchscreens allow for better order accuracy, and allow for suggestive selling, potentially making the basket ring higher.
Rachel Mehl, specialized category manager for Cuba, Mo.-based Wallis Cos., with 34 company operated stores, outlined how her chain took foodservice to the next level with technology.
Today, the chain offers 32-head fountains, roller grills, multiple flavors of coffee, fresh sandwiches, fruit parfaits, etc. It also uses digital screens to promote the foodservice offerings. Willis Cos. controls the content and so it can update it at any time to convey daypart specific or limited time only messages at any time of day.
In 2014 the chain opened an On the Way Café in two locations with made-to-order offerings. The chain then rolled out kiosk screens. As they continue to edit and tweak the screens, they’ve asked staff members who were not involved in putting together the program to test it. “Be open to feedback from team working in the kitchen and from customers,” she advised.
Her best advice to other retailers is to be patient, do their homework, be open to feedback, invest in resources available to allow for efficient development of this technology and always be open to change.