The New Normal

Consumer demand for delivery and pickup services continues to grow

By Tammy Mastroberte

WHILE THE PANDEMIC accelerated the adoption of delivery and curbside pickup in the retail and restaurant industries, two years later, the demand for these services continues to soar.

Convenience stores offering these services now find themselves uniquely positioned to not only offer foodservice delivery to compete with quickservice and fast-casual restaurants, but also make grocery items available, including tobacco and alcohol in certain states.

“We are continuing to see growth in delivery, and we keep rolling out the option to more stores,” Jodi Riggs, external business development manager at Wesco Inc., a Pittsburgh-based chain of 55 c-stores, told Convenience Store News.

Wesco actually started offering delivery using Vroom Delivery in 2019 prior to the pandemic, and each year has seen tremendous growth in the offering — which is now available at 14 stores, with plans to roll it out to 20 more locations by July 2022.

In 2020, Wesco saw delivery grow 233 percent over the prior year. Last year, it grew another 177 percent compared to 2020, according to Riggs.

“We also saw about a 25-percent increase in sales within the first year of rolling out delivery at some of our stores, and we see higher rings or basket sizes [for delivery] vs. in-store purchases. In some cases, this is up to 5 times higher,” Riggs reported.

Consumer research done by Hathway, a consulting firm focused on digital solutions, found that today’s shoppers want delivery as an option for c-stores and will use it when it is available. In February 2022, the company surveyed 2,000 adults equally distributed among age groups and locations across the United States and found that an average of 49 percent had ordered from a c-store in the past 12 months — up 6 percent from a survey done three months prior.

Among those who ordered via delivery, 18- to 29-yearolds were the highest percentage to use this option (75 percent), followed by 30- to 44-year-olds (60 percent).

“The study also showed there are a lot of consumers who are trying to order delivery from a c-store only to realize they don’t provide the option,” noted Kevin Rice, president and chief marketing officer for Hathway.

Approximately 42 percent said they attempted to order delivery in the past 12 months, but the c-store didn’t provide it. Then, 62 percent of those who could not make the purchase tried again within a few months, Rice shared, noting how the data shows a gap between consumer expectations and what is being offered. Additionally, 81 percent of consumers in the survey said they anticipate ordering via delivery more in the future.

“People want this and the data is showing it,” Rice said. “Demand will continue to grow, and it creates so much opportunity in the c-store space because delivery skews toward the dinnertime daypart and that is a daypart c-stores have historically struggled to capture.”

Competition in the “convenience” space is increasing as well, with DoorDash opening Dash Mart stores that bring both household essentials and local restaurant favorites to customers’ doorsteps; and companies like Gopuff, which uses its own app, offering delivery of food, home essentials, snacks and alcohol.

“Gopuff is making big investments in foodservice, drivers and technology infrastructure, and they own the stores,

which is c-store competition,” said John Nelson, CEO and founder of Vroom Delivery, an e-commerce solution provider.

The Ins & Outs of Delivery

In the past two years, both delivery and pickup exploded at an amazing pace across all industries. Although many assumed this option would mainly be embraced by the younger generations, research shows there are a variety of age ranges using these services.

“What was expected to take five or more years to roll out happened in six months, and even the older generations that were more reluctant to try these options have become used to it and are now regular users,” Nelson explained.

However, as c-store operators began incorporating these services into their offering, they were met with a variety of challenges. Many are still evolving their practices around delivery and pickup. And, of course, there are still those that are reluctant to dive in — especially smaller chains that either don’t know where to start or don’t have the staff to take it on.

“So many small operators don’t deliver because of the barriers to entry,” said Adit Gupta, founder and CEO of Lulu Delivery, which connects c-store operators to multiple third parties and handles onboarding and fulfillment. “It’s not just getting the data and products into a system, but also updating it and keeping it synced that scares a lot of people away.”

Once a retailer signs up with Lulu, the company takes on the task of adding their products and images to the system and then syncs the stores up with every delivery service available to them, including Uber Eats, DoorDash, Grubhub and more. This includes foodservice, as well as other items in the store, such as tobacco and alcohol where permitted.

“We handle the fulfillment and any transactional issues that come up, and the store just has to pick and pack the order,” Gupta explained, noting that there is no commission for their service. Instead, it works on a monthly subscription fee.

Whether working with third parties or opting for in-house delivery, there are technology considerations and integration needs that will inevitably pop up. At Wesco, the company manually adds items for sale to the Vroom Delivery system and must stay on top of outof-stocks, so the Vroom database is not showing items that are unavailable at the time, according to Riggs. Store employees also must manually add orders into the Verifone point-of-sale (POS) system as they come in, so they are recorded in the PDI back-office system.

“If a customer orders on the Vroom site, our associates get the items and ring them through the POS, but we are currently working on an integration for this to make it easier,” Riggs said, adding that Vroom is integrated into

Choosing the Right Delivery Option

Convenience store operators have a few routes and combinations they can choose from:

1. Third-Party Providers Many c-store operators start in the delivery world by partnering with third-party providers such as DoorDash, Uber Eats and Grubhub. These providers can handle both the ordering and delivery, so the convenience store only has to get the order ready for pickup and make sure the items available for delivery are uploaded into the third-party system and current.

By working with a third party, a c-store retailer can add delivery quickly and put its stores in front of an audience they might not have had prior. The chief drawback of this route is that the retailer will not own the customer loyalty and data.

“When choosing this, you are handing over the relationship with the customer to the third party because they own the transaction and the data and can continue to market to these customers,” said Kevin Rice, president and chief marketing officer at Hathway. “C-stores should be deliberate about using them as an acquisition channel and then getting [customers] to order directly through their brand if and when that is available.”

For retailers that find the task of uploading all its offerings onto these third-party platforms and managing the process too large of a task — especially for smaller chains — there are also companies like Lulu Delivery that will handle this part for a monthly fee.

2. Outsourcing the Drivers For c-store operators that want to remain in control of the ordering process and retain the customer data and loyalty, they can work with certain third parties using a white label solution. This route allows the c-store to take the orders and handle the transactions on their end, and then outsource the driving part to the third party.

“DoorDash and Uber Eats are the two biggest providers with white labels and are the easiest to work with because they are so big,” said John Nelson, CEO and founder of Vroom Delivery.

3. Taking It in House For convenience store operators with the capital to invest and the resources to dedicate to it, creating an online ordering and delivery system in-house using employees as drivers is yet another alternative. This can get complex from a technology perspective, but there are options available to the c-store industry today to make it work in a seamless way.

“The most advanced players in our industry, like 7-Eleven and Casey’s, have moved to trying to own more of the process and do it on their own,” said Kay Segal, founding partner of Business Accelerator Team. “That doesn’t mean they don’t use third parties too, but it goes back to owning the data, the consumer and the process.”

the chain’s app so that customers can also order directly from there. The company is working with Vroom to integrate its loyalty program, too.

“The reality is one piece of technology is not going to provide all the functionality needed to be a best-inclass provider to the consumer,” observed Kay Segal, founding partner of Business Accelerator Team, a convenience retailing consultancy based in Phoenix, Ariz. “The retailer really needs to map out their development journey for delivery and pickup and look at what can we start with and what can we build onto that. It’s not a one-and-done.”

Another lesson Wesco learned since launching delivery in 2019 is that customers want items available at their local stores that may not be available at all locations. Initially the chain launched delivery and pickup with products only available at all locations, but it is now working to expand and customize for different stores.

“Our top category for delivery is pizza and grinders, and second is cigarettes,” Riggs noted. “Hot deli, hot combo meals, and then beer and liquor follow.”

“We see higher rings or basket sizes [for delivery] vs. in-store purchases. In some cases, this is up to 5 times higher.”

— Jodi Riggs, Wesco Inc.

Handling Age-Restricted Items

When delivery first became popular, alcohol was not always permitted. But now, it is an option in many states, with DoorDash adding the category to its menu as well.

Richmond, Va.-based GPM Investments LLC, with 3,000 locations comprised of approximately 1,400 company-operated stores and 1,625 dealer sites where it supplies fuel, has been working with DoorDash as its main third-party delivery provider since July 2020 and recently added alcohol to its menu in Virginia, with other states to roll out soon.

“Offering alcohol through delivery is a must-have for convenience stores where alcohol delivery is legal,” said Jim Rastetter, category manager for GPM. “Consumers who buy their favorite alcoholic beverages through delivery typically have larger baskets.”

The addition of age-restricted items comes with its own challenges because age verification is needed. At Wesco, when a customer places an order, they enter their birthdate into the system and then, when an associate prints out the order, it has that birthdate listed. Upon delivery — done by Wesco’s own employees — that date is compared with the customer’s ID.

“Because we have our own drivers, we can deliver anything we want, including alcohol and tobacco,” said Dan Sloboda, fresh research and development lead at Wesco.

One of the reasons the company decided to handle delivery in-house was because many of the chain’s rural locations could not be serviced by the third-party delivery vendors. “Uber Eats, for example, could only service 35 percent of our locations,” Sloboda recalled.

Wesco delivery drivers are store employees who are not only paid a delivery fee by the company, but also have the opportunity to collect tips on each order.

There is no live tracking for delivery, but customers are notified along the way through the Vroom system. “Our associate clicks ‘OK’ to let the customer know we received the order, and then can click and send updates via text or email depending on [the customer’s] preferences saying the delivery is on its way,” Riggs explained.

At the start of the pandemic, delivery may have been thought of as a temporary fix, but today it is an expected part of doing business for all retailers and restaurants, according to Rastetter.

“Delivery is here to stay in the convenience store industry,” the GPM executive predicts. “Over the past few years, we have seen a great response from our customers and we plan to continue to invest in growing our delivery presence.”

“Delivery is here to stay in the convenience store industry. Over the past few years, we have seen a great response from our customers and we plan to continue to invest in growing our delivery presence.”

— Jim Rastetter, GPM Investments LLC

The Ins & Outs of Pickup

The popularity of pickup vs. delivery varies from retailer to retailer. While some retailers are doing a lot with pickup, others are seeing delivery blow past this option.

At Vroom, for every one curbside pickup order, the company sees 10 delivery orders come through, according to Nelson. This is definitely the case at Wesco, said Riggs, who noted that the chain averages 2.48 miles for delivery distance, although it’s offered up to seven miles.

“We offer both curbside and counter pickup in our stores, but we are not seeing the growth in these areas that we are seeing in delivery,” she reported.

However, some experts believe curbside — and even drive-thru — will continue to be an important piece of the puzzle to meet consumer demands. Some c-stores like Speedway have started adding drive-thrus, and even restaurant chains with drive-thru or curbside “weathered the pandemic storm much better than those who didn’t offer it,” said Hathway’s Rice.

“It’s important to have a flawless experience with curbside pickup if you are offering it,” he stressed, noting Target does this well. The system tells a customer when their order is ready, which spot to pull into, and then has someone there to put the order in the trunk.

“With pickup, location services and having everything really dialed in is so important,” Rice said. “You don’t want to have someone show up and be confused with what to do to get their order.”

When the pandemic hit, most fast-casual and quickservice restaurants began offering curbside pickup as an option, even those that already had a drivethru onsite, said Tom Cook, principal at King-Casey, a restaurant and foodservice consultancy based in Westport, Conn.

At c-stores, customers are looking for more than foodservice as part of the pickup experience. “Virtually every c-store I know offering curbside is offering more than just foodservice items, and some of them who tried foodservice only had to change it because customers were asking for other items,” Cook explained. “It’s the same thing with the drive-thru.”

For those not offering delivery, curbside pickup has become a necessity — even if a store starts out slowly with taking orders over the phone and offering basic signage out front with a couple of designated parking spots, according to Cook. However, to be best-in-class, investing in a mobile app and geofencing technology is ideal, he said.

In direct response to the pandemic, March Networks launched a mobile order pickup solution that uses artificial intelligence-enabled cameras that alert employees when someone is outside waiting for pickup. When a car pulls up, one option is to have a light connected to the camera that changes from red to green to let employees know someone is waiting, said Jeff Corrall, vice president of product management at March Networks. Another option is to have a message or alert sent to employees through a software system.

“It’s a camera with a recording solution on sight, and then we have software that pulls it all together and is an extension of other features the software already offers like tying point-of-sale transactions to in-store video,” Corrall explained.

Today’s convenience stores are competing with not just those in their industry, but also with restaurants, grocery stores, and even Amazon. Creating processes for a smooth experience, whether delivery or curbside, is necessary to keep up, said Segal.

“It’s not a one size fits everybody. Because of where your stores are located, you might have to have different options to execute these services, especially delivery,” she said.

“7-Eleven and Casey’s have their own operations, but they also partner with a mixture of third parties. The goal is to do everything you can to try and own the customer, the data and the relationship,” she added. “So, retailers need to think about how to set it all up to accomplish that.” CSN