This article published July 2017. For latest news THIS MONTH'S ISSUE
By Fiona Briggs
Convenience and forecourt retailers need to learn how to operate at two clock speeds: a fast clock speed, which generates rapid innovation; and a regular clock speed to ensure they remain relevant for their customers.
That’s according to Joe Bona, president of Bona Design Lab. Speaking at the 2017 NACS Insight Consumer Summit - Europe, Bona drew on the themes presented in a new book (The Essence of Business), published by Jacob Schram, group president for European operations at Alimentation Couche-Tard Inc., and this year’s European Convenience Retail Leader of the Year, to highlight the need fast and regular operating modes.
Showcasing a number of videos, Bona presented the disrupters in the marketplace and the changing face of convenience retail. Despite fresh challenges, the fundamentals of retail have remained the same since Roman times, Bona told delegates. Indeed, a lot of what is old is new again, such as farmers’ markets, he said. “It’s the experience that we are trying to deliver as much as what we are selling,” he explained.
However, there are new realities - technology and online shopping - that are affecting how the consumer shops.
Bona cited Credit Suisse research, which showed that 8,600 bricks and mortar stores would close in the US in 2017 with stalwarts like Macy’s shutting 100 department stores, for instance.
“The retail landscape that we know is really dead,” he said. “Shopping centres are no longer going to be destinations for retail but for companies like Ford,” Bona added.
But retailing is alive and well, Bona argued and he urged delegates to shift their mindsets on how they think about the retail environment.
“The convenience industry is much bigger than we think,” he said. Convenience retailing no longer takes place just on the forecourt and in traditional, 7-Eleven stores, Bona argued. “The world of convenience has got quite large,” he said. Grocery stores are shrinking their footprints; while sushi is the number one sku for the pharmacy chain Duane Reade, he revealed. Similarly, QSRs are taking share and helping to drive format change, Bona added.
Bona highlighted ‘fast clock speed’ companies such as Amazon, with its Amazon Go concept, where shoppers use an app to enter the store and can simply pick up products and go, without waiting in line or using a checkout.
“That’s pretty impressive but it took someone outside our industry to create that disruptive technology,” Bona said.
Eatsa is another disrupter. It sells customized bowls of quinoa using an automat style, self-serve ordering process. Again, there are no cashiers to interact with. Consumers simply make their selections from large menu displays and order from a wall of iPads in-store, paying by credit card and receiving an electronic receipt. When their order is ready, their name is highlighted on a LED-lit cubby, so they know which one to pick. Products are created in a kitchen behind the scenes but it is delivered by technology. “It’s delivering what people want in a more efficient way,” Bona explained.
Ace Hotel in New York City is changing consumer behaviour too, Bona revealed. It has turned its large lobby area into a social gathering space, rather than restrict its use for hotel guests. “It’s blurring the lines between home, the office, a cafe and shop - it’a place to gather,” Bona said and advised retailers to consider the opportunity for seating areas in their stores.
Driverless cars are another potential disrupter, which will change the nature of the forecourt and put more pressure on sites to be relevant, Bona said. If sites attract less traffic in future, retailers need to devise new ways to encourage people to visit, in the same way that they have added foodservice to their offer. Future concepts will offer places to park because there will be a lot of ride sharing and spaces for Uber cars, he suggested. Fuel will not be the first thing people see, he said.
Drone delivery concepts are at the early stages of development but could also disrupt the industry in future, said Bona. However, he suggested their deployment was probably most likely in warehouse environments.
Further disruptive forces are evident in the Fuelme, gas on demand concept; Walmart’s first pickup point and Amazonfresh pickup, which is free and exclusive to Prime members.
“People are looking at convenience in a different way,” said Bona, “it’s about how we buy, not what we buy.”
Bona went on to showcase convenience and forecourt retailers who are operating at a regular clock speed and increasing their consumer relevance. Presenting a number of entries in this year’s International Convenience Retailer of the Year Award, Bona show how stores are transforming and delivering new experiences.
They included Topaz’s new Cantina Mexican food concept in Ireland, deli by Shell in the Netherlands, Migrolino’s fresh foods promise in Switzerland and the 2017 Award-winning Spar Natural in the Gran Canaria; which Bona dubbed as a coming together of Whole Foods Market and Trader Joe’s.
“There’s a need for a lot of innovation,” he concluded.
Brian Donaldson, CEO Maxol, supported Bona’s market analysis. “It’s where we are in terms of our strategic plans. The short-term economy looks very positive but we have got to look at what it will look like in 2025.
“I think the business model has changed with Uber and TaaS (Transport as a Service), so people are going to be ‘pay as you go’ in terms of vehicles.”
Electric will also be a disrupter in the energy market, Donaldson added. “It’s going to be the energy of the future. Change is much faster within battery technology. Therefore you need to consider who to partner with otherwise you could be left out in the cold.”
Donaldson suggested forecourt sites may also evolve with off-licences and the ability to serve wine or beer within their restaurants. “It’s another way of trying to build that night time business,” he said.
As with all new ideas, the clever people will be the ones who implement change the quickest, Donaldson summed up.
Insight research and BONA DESIGN LAB have formed a partnership to better assist a growing portfolio of global clientele. With over 50 years of combined industry expertise and a proven track record helping companies develop leading edge solutions, the new alliance is uniquely equipped to help bring the right elements of any retail format into focus to drive growth and increase productivity. This new arrangement represents a step change and an expansion of retail agency services into the European market.
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