Coca-Cola sponsors this blog, as well as the Association for Convenience & Fuel Retailing/Coca-Cola Retailing Research Council, which is dedicated to understanding and developing practical responses to strategic challenges experienced by the convenience retail industry and its operators. Visit CCRRC.org to learn more about the council and the studies it produces. We spoke about channel blurring with NACS/CCRRC Research Director Bill Bishop and former council Chairman Fran Duskiewicz, who is senior vice president of Nice N Easy Grocery Shoppes
In the boom years before the recession, retailers were noticing consumers’ growing penchant for splitting up their grocery shopping trips between the discount chains, warehouse stores and supermarkets ranging from low-price leaders to high-end gourmet groceries. These days, they’re much more likely to be able to find just about everything on their lists in one place. Channel blurring is a growing trend, driven largely by recent changes in the economy, says Willard Bishop Chairman Bill Bishop.
“Really, there are two aspects to it — growth is slowed, so everybody’s looking for where else they can get growth. Number two, while it’s not absolutely uniform, there’s a greater emphasis on value and value for money. So those are the two trends in my opinion that are propelling channel blurring. To a certain extent, while it’s kind of a loop, channel blurring starts with a retailer either intentionally or inadvertently getting into someone else’s space.”
Channel blurring is going on across the board, but Bishop and others say it really started with convenience stores, which have added quick-service restaurants to their list of rivals as they upgrade their prepared food offerings, largely in an effort to offset slowing tobacco sales.
“It used to be we owned convenience, that’s the name of our industry, but the fact is we don’t own convenience anymore,” said Fran Duskiewicz, senior vice president of Canastota, N.Y. -based convenience store chain Nice N Easy Grocery Shoppes. “The shopper is defining what’s convenient. I think we started it, by getting more and more into food service. We were really the first of the well-defined channels to wander off and start doing something different. We always had the best locations because we were always on corners. So, we got into the QSR business. Then chains got into more health and beauty, we’re always looking for that extra piece. We started it, and then it got ramped up by drugstores moving out of strip malls or shopping centers. About 10 years ago, drugstores started buying corners, that’s what’s really ramped it up; they’ve gotten into convenience locations.”
Efforts to grow by charting new channels can be incremental, such as convenience stores building on their existing deli and convenience food offerings, to out-of-the-box, like the sushi bar at Duane Reade. Duskiewicz and Bishop agree that, while future survival demands that retailers blur the channels, it still doesn’t mean any of them should try to be all things to all consumers. Instead, there should be a plan based on where your customers are now and what they want.
“Where I see a lot of people making mistakes is when they’re wandering a little too far out of their comfort zone. Just because you can sell something, doesn’t mean you should or will do a good job of it,” Duskiewicz said.
Nice N Easy has been formulating its plan with plenty of input from employees as well as customers. About 80% of the company’s store managers are women, the perfect people to ask about how to make the stores more female- and family-friendly. One surprising result was the suggestion that the convenience store chain beef up its cosmetics offerings, to appeal to travelers and women on the go who need something in an emergency. “You don’t have to go whole hog to create a certain amount of appeal to a woman customer.” Customers are also a source of useful feedback — the chain averages about 100 questions and comments per day on its website and mobile application, which rewards customers with digital coupons for answering specific questions, Duskiewicz said.
The nature of channel blurring means retailers can’t just look at the same companies they’ve always considered as their competition, said Bishop, who also serves as chief architect of a new effort called Brick Meets Click. Instead, he said, “Figure out what your target shoppers are looking for and work hard to give it to them.”
That will become even more important as more of your customers get comfortable shopping online, he said. “We haven’t seen anything yet. As everybody goes digital, it will be possible for very small stores to augment their offering in the same way stores five or 10 times their size could do.”