Delivery Crunch Time

As more channels move into delivery, c-stores need to get in the game or get left behind.

By Erin Rigik Del Conte, Senior Editor

Sandwiched in between Gen X and Millennials, I’m what Dan Woodman, associate professor of Sociology at the University of Melbourne, has coined an ‘Xennial’—those born between 1977 and 1983, and the last generation to grow up without social media and smartphones, but who share the unique experience of coming of age in the midst of the technology boom.

Like other Xennials and Millennials, most of what I purchase is bought via an app and arrives at my front door—including 99% of non-perishable groceries, and most other products, from pet food to clothes and gifts—thanks to Amazon Prime’s subscription service or various online businesses.

Just five years ago, I used to walk to the convenience store around the corner for fill-in trips. Now, I use Amazon Prime’s next-day or two-day delivery option. Soon, I won’t even have to wait a day. Amazon already launched its Prime Now one-hour and two-hour delivery service in Denver.

While I still drive to the grocery store for perishable items, Grubhub, EatStreet and other meal delivery services help me fill the gap between trips.

The data shows I’m not alone. Delivery now represents 1.7 billion foodservice visits annually, according to The NPD Group, a global information company. NPD recently found one-fourth of all U.S. consumers claim to have ordered a meal via delivery in the past three months. Young adults represent 56% of food delivery orders. Some 29% of Millennials ordered restaurant foods/beverages via delivery in the last week while nearly 50% of boomers and older use delivery less than once a month.

Grocery stores are getting into the delivery game. Stop & Shop Supermarket Co. recently partnered with Instacart to bring same-day delivery to Stop & Shop customers in Boston. Grocery chain Aldi is launching a pilot with Instacart to deliver groceries in Los Angeles, Atlanta and Dallas with the potential of expanding to more cities in the future. Grocery chain Giant recently added delivery via Instacart in the Philadelphia area—customers can use the Instacart app to fill a virtual cart and select a delivery time anywhere from within an hour to seven days in advance. And that’s just to name a few.

NPD Group’s June 2017, “The Virtual Grocery Store” found online grocery shopping development still lags behind other e-commerce industries—just 7% of customers reported shopping for groceries online in the past month—but that number is expected to grow rapidly because of demand from young adults and men. Some 60% of online grocery shoppers are men and most of those men are either Millennials or Gen X, NPD reported.

Meal kit services, such as Blue Apron, are also seeing a surge in popularity, but adoption is slow. NPD estimated 5% of households use meal services, but that number is also expected to continue to grow, led by the Millennial generation.

Getting On Board The Delivery Train
Young adults are changing the meaning of “convenience.”

7-Eleven has been testing various platforms for the last couple of years, including working with Postmates and DoorDash in various markets to offer on-demand delivery, as well as mobile delivery service app Tapingo to deliver food on various college campuses.

Even Dollar Tree and Dollar General offer online ordering and delivery—with Dollar General including the option of 1-2 day delivery.

Target recently acquired transportation technology company Grand Junction and has plans to move into the business of same-day delivery.

Walmart has been using ride-sharing companies Uber and Lyft to help it achieve same-day grocery delivery in Denver and Phoenix and is set to expand the service to new cities.

If c-stores are known for quick and easy ‘immediate gratification’ trips, what happens when grocery stores, big box stores, food delivery services, Amazon and others all start to fill that need better? If convenience stores are no longer the most convenient option, what are they?

Delivery isn’t just coming—it’s here—and technology continues to evolve to make it faster, easier, cheaper, better. Savvy c-stores are looking for viable partnerships and considering ways they can bring their goods to customers’ doorsteps. Delivery technology isn’t going away. The upcoming generation demands it. Just ask the likes of brick-and-mortar department stores like Macy’s and J.C. Penny’s that find themselves struggling amid the changing shopping preferences of Millennial consumers. Flexibility and a willingness to change and adopt is key to thriving in a technologically forward-thinking world.

C-stores need to join the delivery market before other channels become more “convenient” than convenience stores.

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Comments

  1. Great article, Erin… and scary. As long as there are automobiles, I believe convenience stores will survive, but they will have to make some drastic changes. As I said in a recent article, being a convenience store operator is like playing a baseball game while the rules keep changing during plays. You don’t solve the problem by making new rules. You solve the problem by going back to the basics and redesigning the game from the get-go. Convenience store owners are sitting on billions of dollars worth of stock they have pretty much turned their backs on, forcing their suppliers to fill their store with more stuff they cannot sell. Don’t blame the suppliers, they are only doing what we asked them to do. There is little differentiation between one store over another today. For some time now, the industry has been relying on the advertised street prices of gasoline, and as gasoline gets more expensive, the value of being a penny cheaper than your neighbor is of lesser importance. I could make a lot of money in a convenience store if I had complete control over the CPG inventory in the store, but not if I were encumbered by current, accepted management techniques. C-Stores operators are NOT thinking outside of the box, because they have allowed themselves to be chained inside the box. ‘Experts’ have become failing leaders, because it suits them. This has got to stop, and it has to stop now.

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