Talking tech: Technology driving development of convenience format
Umbrella brands like Nisa are as keen to take on new technologies as the multiples
Convenience retailing is well placed to capitalise on the public's appetite for easy shopping with technology, including mobile, cloud-based operations systems and location-linked promos, driving the sector's development. Andrew Don reports.
Barclaycard's launch of PayTag, a new way to pay with a mobile phone, is one of a raft of developments competing to make shopping more convenient over the next few years.
The device, which will hit the market next month, is about a third of the size of a plastic card, attaches to any mobile phone and can be used to make payments of up to GBP15-20 (US$24-32) by holding it over a contactless payment terminal.
Mainstream grocery retailers are offering, or introducing, contactless payments and convenience symbol and umbrella groups such as Spar, Costcutter and Nisa are also putting the necessary infrastructure in place.
Further developments that will increasingly feed into the convenience sector include mobile phone-linked loyalty schemes, self-scan checkouts and hand-held mobile tills. More often, c-store retailers are also set to use location-generated promotions, cloud-based management systems that integrate front-of-house and back-of-house operations, and ever sophisticated data analysis tools.
Convenience and technology are the perfect pairing in this time-poor, consumer-savvy age where competitive choice is vast and even the smallest independent players can afford to be part of the technological revolution.
As Dave Birch, director at Consult Hyperion, says, the steep fees required to hire chip-and-PIN terminals and the associated broadband connections are also changing with the arrival of contactless technology. "Attractive deals are on offer from the major banks that help make the interchange for contactless less than chip-and-PIN."
Birch pointed to iZettle, which has launched a dongle in Scandinavia that turns an iPhone into a chip card reader with no monthly fees and a fixed €0.15 (12p) +2.75% transaction charge.
"Never mind the corner shop. This means the school fete, the window cleaner and the kids football team coach will soon be taking cards quickly and easily," Birch says.
Fujitsu, which works with Marks and Spencer's Simply Food convenience chain, broadly divides today's c-stores into three format types: mini market retail-led, food-on-the-go destination-led, and community service-led.
Andy Taylor, Fujitsu's director of client engagement for the private sector, says each format, as a result of different shopping occasions, has developed different technology needs to support efficient operations and a differentiated customer experience.
However, he says: "One factor remains the same across all convenience stores - the need for technology to deliver reliability with high performance and from a small footprint. Convenience stores don't have spare tills. When technology fails, stores stop trading."
Taylor predicts a greater overlap in the different formats in the next five years with added provisions such as postal or local authority services, financial services transactions at the till, and increasing self-service.
"Delivering all this without adding more labour to provide these extra services and from the same small technology footprint will be the challenge going forward," he says. "We believe there will need to be greater use made of in-store service points, increased integration with consumer devices and a more flexible point of sale/ back office set of applications."
In particular, convenience stores would need to exploit the advances in resilient, secure networks and cloud-based services to deliver more from the small technology footprint in store.
Mark Carpenter, solutions marketing manager at The Logic Group, the managed payments service and loyalty solutions company, emphasises the need for speed and convenience at c-stores. At supermarkets where customers often do their weekly shop, they took their time and they stood to be influenced by marketing initiatives at every turn.
"With convenience you are trying to get in and out and you have an idea why you are going into that particular store," Carpenter says.
Mobile phones would play a key part in the speed - via contactless payment - and a bad experience at the checkout could damage the overall perception of that store even if everything else was good.
"It is that payment process that really sticks in people's minds so it is important to get that right," says Carpenter, whose group works with Irish retailer Musgrave Group.
Chris Osborne, industry principal at enterprise application software company SAP's UK and Irish unit, argues how retailers exploit their customers' mobile devices, whether tablets or phones, is going to be key.
Location awareness, for example, would enable retailers to know where their customers are by tracking their mobile phone signal. This would enable them to send marketing messages to entice them into the store or direct specific purchases in-store. The difficulty would be managing that as part of the overall customer experience because blitzing them with 25 texts messages would antagonise.
Electronic point of sale with all its bells and whistles is likely to become increasingly accessible to convenience retailers at the smaller end of the scale, partly driven by manufacturers.
Jon Dunman, vice-president of convenience and fuel solutions at Torex, an integrated technology solutions provider, says the desire for manufacturers to have access to sales data from the independent sector was enormous. He says cloud applications would increasingly provide a "fantastic opportunity further down the scale" because of their accessibility to smaller players.
"When they see other people using them and how quick the start-up is and how little disruption they get from the cloud I think that will persuade some of the smaller turnover retailers quicker," Dunman says. Without the technology, Dunman insists, it is difficult to drive retail disciplines and customer service.
Darragh Fanning, chief executive of Celtech Software, which is supporting Scottish convenience retailer Icon's move to a cloud-based centralised operations management system, said options for smaller convenience operators had, until now, been limited. Fanning said they had been forced to work with the inefficiencies of stand-alone, non-integrated systems.
But sophisticated management software that provided up-to-the-second visibility of a business was now available, allowing smaller convenience operators to compete with the bigger players without worries about a lack of bandwidth of capacity.
"With access to information and functionality previously only the preserve of larger competitors, smaller shops can work with wholesalers to address stock needs more quickly," Fanning said.
The new-found responsiveness would allow convenience stores to react faster to customer needs and provide the vital element of local competitive advantage.
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