Apr. 15, 2021 "From corner stores to Frankenstores: Why the convenience industry is getting a massive makeover": Today I found this article in the Financial Post:
Cameras at the Couche-Tard convenience store at McGill University in Montreal watch customers as they shop, marking where they go, what they look at, and how long it takes them to get in and get out.
The store is part of a laboratory, where professors in business and computer engineering study the ways shoppers move, charting the natural flow of a convenience store the way a paddler would chart a set of rapids.
The hope, at least one of them, is to find the pinch points, the hazards and eddies in the stream, from door to cash register, and eliminate them. The assumption inherent in this experiment has been a bedrock principle of the convenience store industry for decades: customers have somewhere better to be. The store is just a stop on the way.
Alimentation Couche-Tard Inc., the Quebec convenience giant that also owns Circle K, among other brands, is using the McGill store to get its customers in and out even faster, testing technology that lets customers use an app on their phone to buy products and leave without ever lining up at a checkout counter.
“We feel we sell time to customers,” Magnus Tägtström, Couche-Tard’s head of global digital innovation, said in an interview earlier this year.
But the convenience industry’s time-honoured proposition appears to be in flux as outside forces, such as the rise of electric vehicles, threaten to disrupt the model and force the convenience store industry as we know it to search for a new identity.
“I think the format, and how people define convenience, is really starting to change,” said Norman Hower, vice-president and general manager of the Canadian operations of 7-Eleven Inc.
For one thing, more than 40 per cent of Canadian convenience stores are attached to a gas station. Those stores rely on fuel sales to drive a steady stream of customers inside for a snack or a drink, a stream that will slowly start to dwindle by the expected switchover to electric cars.
To compensate, some chains are already pushing into the electric-charging business. But a charge takes significantly longer than the minute or two it takes to pump gas, which means many convenience stores will soon be forced to confront an unfamiliar beast: a customer with time to waste.
There appears to be two general schools of thought on what the convenience store of the future will look like as the industry tries to keep growing what is a multi-billion-dollar business in Canada, with roughly 25,000 stores employing 215,000 people, according to the Convenience Industry Council of Canada (CICC). Annual sales were $55 billion in 2019, the latest year for which CICC has data.
One school, alive in the McGill lab, uses new technology to get even better at what the convenience store was already good at: shaving away seconds of otherwise wasted time.
The other school envisions something drastically different: a store you’d like to hang out in, somewhere you’d have a cappuccino or eat a meal while, say, your electric vehicle gets a boost.
The two schools aren’t exactly in competition. Most major chains seem to subscribe to both, looking for ways to speed up customers and slow them down depending on a location’s needs.
“The channel, in general, has been fairly static for the last two decades, and I think we’re going to see a ton of changes,” Hower said. “It used to be you stayed in your lane if you’re a convenience store.”
That lane, at least in Canada, has been mostly confined to chips, milk, lottery tickets, cigarettes and hot dogs on roller grills. But 7-Eleven, like some of its competitors, is working on importing a much broader concept from the United States.
For example, one of 7-Eleven’s newly opened “Evolution stores” — in Prosper, Texas, less than an hour north of the chain’s headquarters in Irving — offers margaritas on tap, “artisan craft sodas,” cold brew coffee and espresso drinks, a cigar humidor, mobile checkout and a selection of wine and beer.
One section of the store is dedicated to Laredo Taco Company, a restaurant brand owned by 7-Eleven, that has an outdoor patio and indoor dining seats for up to 50 people.
In Ontario, however, 7-Eleven in February confused shoppers and industry observers when it applied for liquor licences at 61 stores. That month, CBC News reported Ontario Premier Doug Ford discussed the possibility of selling alcohol with 7-Eleven during a trip to Texas a year earlier.
Hower conceded that on-premise drinking is “a little unusual” in the Canadian sector, but said liquor licence applications are part of a longer-term play to bring Evolution stores north.
The Canadian wing of 7-Eleven has already heavily invested into its food operations, with three major commissary kitchens in British Columbia, Alberta and Manitoba making sandwiches, salads and fruit trays for its stores daily, though Hower wouldn’t say exactly how much the company has spent on that initiative. The company has also started frying chicken onsite at a third of its Canadian locations.
But alcohol has long been a delicate subject since most provinces don’t allow convenience stores to sell it. The CICC has been pushing to loosen those rules, arguing that the convenience industry is in the midst of an evolution and needs to be able to try new things.
“Any kind of red tape that governments put in the way of allowing us to do that … to us, that’s a big problem,” CICC chief executive Anne Kothawala said.
The idea behind 7-Eleven’s strategy, at this point, is to develop a sort of Frankenstore: half convenience store, half fast-food restaurant, where impatient customers can get in and out fast and idle ones can sit down for a drink.
“We look at the future of our store model as being more of a fast-food concept adjacent to our convenience-store concepts,” Hower said. “Alcohol and beer and wine could complement that. It’s forward-thinking, and it’s not necessarily the store you imagine today, but really where we’re going to head.”
Those stores may include a Laredo Taco Company, or they could just expand the fried chicken concept that is currently on offer in certain stores. Hower said they’re still early in the planning stage, but he hopes to have “a few” Evolution stores open in metropolitan markets in the next three years.
The company is also pushing further into delivery, a burgeoning part of the business that grew tenfold in 2020, Hower said. The chain currently uses third-party apps, such as Skip the Dishes and Uber Eats, but is planning to roll out its store-branded delivery app, which is already available in the U.S.
Ottawa, meanwhile, will pump hundreds of millions of dollars into the EV manufacturing sector, including a joint investment with the Ontario government to retool a Ford Motor Co. plant in Oakville, Ont.
Parkland Corp., the Calgary-based fuel and convenience chain that runs Pioneer, Esso, Ultramar and On the Run stores in Canada, is now testing different types of charging platforms in markets around the country, though it’s still not clear how often drivers will charge vehicles at home versus on the road, or whether companies offering such stations will be able to make drivers pay for the service.
“It’s hard for me to tell you it’s one for one, gas pump to charging,” Ian White, Parkland’s senior vice-president of strategic marketing and innovation, said. “I would say the model is still being shaped.”
But Parkland needs to find a viable way to make money off chargers if it’s going to install them, he said, either directly by selling electricity or by selling other things at the convenience store while drivers wait.
White said Parkland still isn’t sure it will move into the charging business at all. In the past year, Parkland has grown more confident in the resilience of its regular business, even without the knock-on foot traffic from its adjacent gas stations.
Fuel sales plummeted through the pandemic as consumers commuted less and stayed home more, but convenience-store sales stayed strong, he said.
As a result, the EV revolution does not necessarily mean doom, or even massive disruption, for some convenience stores.
Barclays analyst Karen Short cautioned against using EVs to spin a “negative narrative” around the future of convenience-store sales.
“It’s going to be a much more gradual change,” she said. “It’s not one of those one-offs, you know, suddenly an inundation of electric vehicles.”
Couche-Tard also still sees a future in fuel, despite some high-profile recent attempts at diversifying its global convenience empire. In January, the chain was in talks to acquire French supermarket chain Carrefour SA, but the deal fell apart amid protest from French government officials.
Still, the two companies are exploring operational partnerships, which Couche-Tard chief executive Brian Hannasch suggested could help the Quebec chain improve its food procurement efforts, grab-and-go meals and bakery items.
“As we see the retail landscape changing, channels continue to blur,” Hannasch told investors on a conference call in January, after talks on the acquisition ended.
Hannasch said Couche-Tard has explored expanding into several “adjacent” retail categories, including dollar stores, grocery and fast food. “First and foremost, we’re a retailer,” he said, though he added Couche-Tard plans to remain in the fuel business for a “long time.”
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Halifax, said the move toward grocery makes more sense than it sounds, especially if working from home persists in the post-pandemic era since convenience stores are often embedded in dense residential areas.
He suggested that if Couche-Tard was prepared to purchase Carrefour, it could also afford to acquire a Canadian grocer instead.
“Couche-Tard is probably one of the most misunderstood Canadian companies out there, in agri-food for sure,” Charlebois said. “I was talking to a lot of people outside of Quebec and they were just scratching their heads: ‘How can a convenience store operator want to buy the No. 7 food retailer in the world? That doesn’t make any sense.'”
But it does make sense, he said, because Couche-Tard is a sophisticated global retailer, not the small-town corner store operator that many mistake it for.
At McGill, the Couche-Tard lab store is separated into 15 invisible zones, each monitored by cameras. Some zones are bigger than others, but most measure a few metres by a few metres. The main entrance is a zone, as is the checkout. Other zones include the coffee maker, the ice cream machine and various shelving sections.
The store logs when a customer moves from one zone to the next, guessing their gender and age at the same time.
“We want to understand how people are moving inside the store,” said Maxime Cohen, an associate professor at McGill’s Bensadoun School of Retail Management who co-chairs the retail innovation lab.
The point of understanding the movement isn’t just to flag any pinch points that are slowing customers down. It’s bigger than that. The researchers at the lab are hoping to feed the collected data into a model that uses machine learning to predict customer behaviour before it happens.
The data collected from the zones — anonymized and aggregated — can show, for example, that 20 per cent of customers in the entrance zone went directly to the ice cream zone.
“Think of a tree with branches,” said James Clark, a professor of electrical and computer engineering who also co-chairs the lab.
Each branch is a possible customer trajectory through the zones. The thicker the branch, the more popular the trajectory.
One plan behind collecting all this data, Clark said, is that it will start to show patterns in customer behaviour over time.
The company will be able to track how that behaviour changes when researchers “intervene” by, say, adding a new display, putting a product on sale or changing the shelf placement.
Eventually, perhaps, the store will be able to predict how a minor tweak on the sales floor will impact future sales.
“That’s one idea,” Clark said. “Who knows if that will work.”
Nov. 7, 2022 "Hot dogs and cold beer: Four Edmonton 7-Eleven stores now selling booze": This is by CTV News Edmonton:
Slurpees are being sold alongside hard seltzers at more 7-Eleven stores in Edmonton.
Wednesday morning, the convenience store chain announced that three more 7-Eleven locations in the city were licensed to serve alcohol.
The first licensed 7-Eleven store in Canada, located in Edmonton at 14110-127 Street, was opened in December 2021.
Slurpees are being sold alongside hard seltzers at more 7-Eleven stores in Edmonton.
Wednesday morning, the convenience store chain announced that three more 7-Eleven locations in the city were licensed to serve alcohol.
The first licensed 7-Eleven store in Canada, located in Edmonton at 14110-127 Street, was opened in December 2021.
The company said the success of the pilot location led to the expansion of the format.
Six more locations are being planned, a 7-Eleven representative said, with the company aiming to have 10 total licensed stores in Alberta by the new year.
Beer, wine, coolers and hard seltzers will be on sale in all four locations from 11 a.m. to 11 p.m., and will be available for delivery from 9 a.m. to 1 a.m.
All staff that handle alcohol are ProServe trained, the representative said.
Canada's four licensed 7-Eleven stores are all in Edmonton and located at:
- 6975 Ellerslie Road
- 8210-160 Avenue
- 1704 Mill Woods Road
- 14110-127 Street
More Edmonton 7-Eleven stores selling alcohol | CTV News
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