In the 1989 sci-fi movie classic “Star Trek V: The Final Frontier,” Sybok states, “The people of your planet once believed their world was flat. Columbus proved it was round. They said the sound barrier could never be broken. It was broken. They said warp speed could not be achieved…”

For years now, the dominant belief amongst establishment thinkers has been that the convenience store channel is relatively impervious to the impacts of e-commerce compared to other retail formats. Convenience stores primarily serve as destinations for quick and unplanned shopping trips, and by blanketing locations near consumers’ homes and workplaces, they created an organic monopoly on the value proposition of convenience.

Admittedly, the immediate gratification element of convenience stores is hard to replicate through traditional pureplay e-commerce. But e-commerce has since progressed far past the original pureplay model, as nearly every retailer now has omnichannel fulfillment options such as click-and-collect and on-demand delivery. This progression has quickly weakened convenience stores’ competitive advantage and puts their traditional operating models at risk of being disrupted.

This article explores how both traditional convenience stores and online-only startups are reimagining the shopping experience by integrating digital value propositions, and it explains how CPG brands can prepare for the inevitable shift that will happen by leveraging some of the lessons learned from online grocery.

Traditional Convenience Stores

While traditional convenience stores lack the infrastructure required for pureplay e-commerce capabilities, their massive network of brick-and-mortar stores could serve as an advantage compared to other retail formats when it comes to omnichannel capabilities like curbside pickup and same-day delivery. As I’ve discussed in previous articles, physical stores can be a huge asset in e-commerce if they’re used effectively.

Just how powerful could the convenience store fleet be in the channel’s evolution toward e-commerce? To put it in perspective, Walmart currently has 4,800 U.S. stores. Convenience store giant 7-11, on the other hand, has 9,800 locations, in addition to the 3,900 Speedway stores it recently acquired. In total, there are 152,720 convenience stores in the United States, representing more than one third of all brick-and-mortar retail locations. With that many stores in such close physical proximity to so many Americans, the c-store channel actually has the potential to outperform other retail formats in the highly competitive areas of curbside pickup and on-demand delivery.

On-Demand Delivery

Delivery from convenience stores is not necessarily a new phenomenon. In fact, 7-Eleven started testing a delivery service with Postmates in 2015. Though convenience stores were adding on-demand delivery capabilities prior to COVID-19, the coronavirus pandemic certainly accelerated this trend. Since March, several large convenience store chains have started or expanded on-demand delivery services, including:

• Sheetz: Partnered with GrubHub to offer delivery from 390 locations
• 7-Eleven: Expanded partnerships with Postmates, DoorDash and Favor Delivery to cover 90 percent of participating U.S. stores
• ExxonMobil: Connected its over 10,000 branded wholesalers to delivery services from DoorDash, Grubhub, Instacart and Uber Eats

In fact, the National Association of Convenience Stores (NACS) surveyed its members in early July and found that 21 percent had increased their delivery capabilities since the start of the pandemic.

Curbside Pickup

How can convenience stores make that quick trip to fill up your tank and grab some snacks even more time-efficient? By utilizing the several idle minutes it takes you to get gas to deliver the items you pre-ordered and paid for through the retailer’s smartphone app. That is exactly what Casey’s General Stores is offering at over 2,000 of its locations, but it isn’t alone, as competitors like Cumberland Farms, QuikTrip and Kum & Go have also started offering curbside pickup options.

Since the pandemic started, 33 percent of c-store operators have introduced or expanded curbside pickup, according to the NACS survey.

Online Convenience Stores

In addition to traditional brick-and-mortar stores that are now offering pickup and delivery, the shift to e-commerce in the c-store channel is being further accelerated by the growth in online-only convenience stores, the most notable of which is goPuff. Instead of partnering with convenience stores to use their existing infrastructure and inventory, goPuff purchases products directly from CPG manufacturers and stores the items at its more than 200 miniature fulfillment centers across 500 U.S. cities. goPuff’s orders are up 400 percent this year, with projected annual recurring revenue blowing past $1 billion.

DoorDash further validated the digital convenience store model with its recent launch of its DashMart stores. In addition to household essentials, DashMart offers delivery of popular packaged food items from local restaurants that DoorDash users already love, thus strengthening the company’s partner ecosystem and connection to local markets.

CPG Brands Should Be Taking Notice

Blurred Channel Lines

When consumers rushed to grocery stories to load pantries during the initial phase of the coronavirus pandemic, they were often met with some combination of barren shelves, crowded stores, and operational restrictions that left a lot to be desired in the shopping experience. As they shifted from physical to online grocery shopping, consumers were again faced with challenges, this time because e-commerce capabilities were stretched to the breaking point. Needing to adapt once more, they then turned to their local convenience stores desperate for consumer staples that couldn’t be purchased through the grocery channel. During this timeframe, convenience stores saw spikes in sales of atypical grocery categories. Because shoppers needed to explore convenience store offerings more carefully during this tumultuous time, their brand recall and customer loyalty should greatly increase post-pandemic and as the channel digitally evolves.

Where Online Grocery Fails

You might still be wondering why your CPG brand should allocate resources to the nascent online convenience store channel when its growth and popularity pale in comparison to that of online grocery. The answer comes down to understanding where the latter is falling short with consumers. Grocers are seeking to maximize cart values to offset the increased operational costs from online fulfillment, but that isn’t aligned with every shopping occasion. What about when you just want a bag of beef jerky, a candy bar and a sports drink to consume while watching the football game? Convenience stores have always served this impulse purchase behavior better than large retail footprints, and there is no reason it won’t continue to do so as the digital shift progresses.

Conclusion

Convenience has always been the prevailing trend in the CPG industry. How convenience is defined today is different than in the recent past, and it will be even more different in the near future. As consumer expectations significantly change over time, the key is for CPG brands to understand how behavioral trends converge with the natural consumption of their product offerings. Is the convenience channel the next frontier of CPG e-commerce? I’m going to bet our old Star Trek friend Sybok would have likely posted this on his Twitter feed today: “They said the convenience channel could not be disrupted by e-commerce. U.S. consumers proved it could.”