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Are C-Stores Failing in the Digital World?

What is Being Done Wrong? | What is Being Done Right?

cartoon illustration showing retail digital failure with 404 page

he draw of convenience stores is clear - it’s literally in the name!  Customers want fast transactions, easy to find products, and the ability to purchase the products they’re seeking with as little time expenditure as possible.  This is more true than ever in today’s highly digital society.

Yet as we progress in this new age, digital failures plague us.  The biggest question is if convenience or “c-stores” can keep up with the times and successfully adapt to modern life.  They are certainly trying; in 2019, the Harvard Business Review surveyed many CEOs and high-ranking executives and found that digital transformation was their #1 concern.

C-stores are a significant part of the economy and impact the daily lives of consumers, and digital transformation with c-store system implementation seems to be the only way forward.  No store is unaffected by the digital wave, but their achievements range from successful to disastrous.

Challenges C-Stores Face Implementing Technology

Change and transformation must start from the top, but many c-store executives remain uncertain of how to properly implement new technology and prepare for post implementation requirements.  While technology moves quickly, companies adapt and incorporate it at a slower pace.

C-stores are impacted in a variety of ways by implementing new technology, and not all of it is positive.  Digital failures in c-stores can poison customer relations and leave executives wary of any digital transformation.

It is estimated that up to 70% of digital transformation initiatives by Enterprise Tech does not reach their goals, leading to over $900 billion wasted cumulatively.  If that number seems much too high, it’s because there are many hidden challenges to technology implementation people are unaware of.  While Enterprise Tech refers to information technology (IT), it is still an example of how tech initiatives rarely stick. Here are just a few of the biggest issues facing C-Stores and their tech implementations today:

These are just a few examples of the issues facing new c-store system implementation.  It is important to realize that implementing technology is not the only problem.  While many stores are able to implement technology to some degree, managing it and keeping it running is a different story.

Challenges C-Stores Face Managing Existing Technology

Say a c-store finally gets around to implementing technology. Great! Now what?

The answer is that the hardest part is just beginning.  Many stores underestimate how difficult it is to manage existing technology and keep consumers satisfied. These unforeseen challenges have a huge impact on the number of DTs that end up failing.

As we’ve already seen, many companies feel that the cost of getting IT teams to each location to establish upgrades is too expensive.  This is also true for updating technology; the more locations a c-store has, the more cost they must incur just to update their technology.

One of the largest obstacles in managing existing technology is tech debt.  Tech debt is less about owing somebody your technology and more about borrowing concepts here and there and relying on a future team to fix it.  Basically, c-stores rush a digital transformation to market to meet demand without knowing how to actually maintain it.

Tech debt can either be a consequence of a rush to market without properly thinking out future needs or a deliberate strategy.  Teams may allow tech debt to gather in order to meet a deadline with the expectation that they can eventually iron out all the details.  Unfortunately, that is easier said than done and can end up harming them in the long run.

It is also important to point out that installing new technology does not necessarily mean employees will be able to navigate it easily.  Systems that are installed without keeping in mind circumstances like a glitch, power outage, or traffic overload will be hard to maintain and cause frustration for workers and customers alike.

According to Zynstra’s annual C-Store Technology Insight Report, only 37% of retailers think their current IT infrastructure can properly cope with customer checkouts during peak periods.  The concern about how much downtime is needed to properly update technology also keeps c-stores from maintaining their technology.

Tall tales of digital failures in c-stores can keep companies cautious and stop them from fully investing in DTs.  Issues in maintaining technology can easily lead to a digital initiative falling flat.

Retail Tech Failures

Digital transformation failures in c-stores can be traced back to a variety of issues.  A primary one is a lack of innovation and an inability to change and adapt to competition.  Evolution is not embraced and the “old way” of business always prevails - until a rival emerges.  By the time the original store tries to catch up, it is too late.

Perhaps no example fits this better than the rise of Netflix and the demise of Blockbuster.  The original movie rental business focused primarily on physical stores and the need for in-person interaction.  When Netflix first gained prominence in 1997 as a mail-in movie service, it was not taken seriously.  Blockbuster even passed on the opportunity to buy Netflix from the founder.

Of course, we all know how that turned out!  The fatal flaw of Blockbuster was the company’s inability to recognize innovation and the clear desire of customers to get movies delivered directly to them.  It’s the same story with Kodak, who dismissed the rise of digital film and focused on the traditional disposable camera.

Forbes published the article “Why Digital Transformations Are Failing” by Steve Denning in May of 2021.  Denning is a senior contributor in leadership strategy, and closely examines the digital failures of C-Stores and more.

“The winners in the age of digital achieved their gains mainly because they learned how to be more capable at creating value for their customers and users.  As part of this, they had to become adept at understanding and meeting customers’ unmet needs, not merely upgrading current products and adjusting internal systems to be more efficient and more profitable: they learned how to enable those doing the work to enhance their skills as value creators.”  Steve Denning, senior contributor at Forbes Magazine

As Denning writes, a failure to recognize what customers value versus what is easiest or traditional for the company will lead to decreased revenue.  In short, c-store tech failures point to a lack of innovation as well as a lack of forward vision. If you can’t picture the future as well as how to implement technology and maintain it, DTs are bound to fail.

The Scope of C-Store Digitalization

The same c-store Technology Insight Report from Zynstra actually provides valuable information about the reach of digital transformations are becoming.  The report finds that 96% of c-store directors or IT managers would look forward to implementing new services and technologies if it was easier to do so.  Clearly, the vast majority of executives would prefer digital transformations.

cartoon illustration of digital failure pain

The adoption of technology by c-stores cannot be mentioned without also discussing how the COVID-19 pandemic has hastened the need to implement touch free and fully digital transactions.  C-stores emerged as a smaller, less crowded alternative to supermarkets and have maintained this increased traffic.

Many c-stores are implementing self-checkout or touch free payment options, as waiting in line is nobody’s favorite activity.  This is only one example of the technological expansion of c-stores are enduring. Other examples include online ordering, checkout, and delivery as well as loyalty programs or brand awareness endeavors. More and more companies are using electric cars, and nearly all have some form of internal Enterprise Resource Planning for their accounting, inventory, and logistic systems.

The amount of c-stores adopting such techniques goes hand in hand with the amount of consumers who prefer them.  With the high number of directors looking to implement these services, it is clear that c-store digitalization is one the rise.

C-Store System Successes

C-stores entering the digital world is not a complete failure!  There are signs that the digital wave of c-stores is coming, despite any initial hesitation.  As more and more stores and retail companies adapt, there is less incentive for companies to sit out and a greater chance that refusing to evolve will have disastrous consequences.

There are certainly companies out blazing trails in terms of success in c-store system implementation.  Even though big supermarket chains have access to more resources, their success in DT can serve as a blueprint for smaller c-stores.

Amazon GO, the new “just walk out” style convenience store being trialed by Amazon, is a prime example.  With Amazon GO, the c-store is completely digital and there is no need to go to the cashier.  An app connected to your Amazon account keeps track of what you select and automatically deducts the amount from your billing.

While this style cannot be replicated by just any c-store and has yet to be widely implemented, it is a good example of a complete DT and reimagining of the traditional business strategy of a c-store.

7-Eleven, often seen as a prime example of a c-store, is also testing a cashier-free location in Irving, Texas.  The concept is similar to Amazon GO, with an app marking each purchase and eliminating the need for a checkout.

“The c-store channel is near and dear to my heart.  It is also antiquated. A commitment to digital technologies is a competitive difference that is currently causing massive disruption in the channel.”

Bethany Allee, Marketing Executive Vice President, Cybera

These success stories represent a complete reimagining of the C-Store layout and business; potentially just what the industry needs to make waves in the digital age.

Are C-Stores Ready for the Tech Revolution?

C-stores have been part of our daily lives and routines for decades.  Their primary draw is location, and they set themselves apart from bigger chains and supercenters.  However, the digital age is upon us and it seems that some companies are struggling to implement new technology in the c-store space.

There are many obstacles facing c-stores hoping to dive headfirst into the technological revolution, with money, strategy and layout being just a few.  Incoming studies and reports seem to suggest there are many issues with digital failures in c-stores, particularly due to tech debt or a failure to prepare for the issues with long term maintenance.

All is not lost!  CEOs, executives, and companies are well aware of their place in the digital age and the progress that must be made.  This awareness is a big part of why c-stores are in fact ready for the tech revolution - the motivation to change instead of resting on laurels will lead to innovation and higher implementation for technology.

As long as c-stores can face the need to re-envision their business strategy instead of rushing technology to the market with little preparation, we are looking forward to a new digital age of convenience.

October 17, 2021