Meeting shifting consumer tastes with gourmet food, trendy decor and delivery
Attila Szanyi, the owner of PopBox Micro Market, a fancy convenience store in Toronto, believes the key to his success is raising the bar for the products he carries.
“I’ve always thought of it this way, could you be almost locked in this room and be sent out to space for a whole year and be happy about it?” explains Szanyi. “Can you have absolutely everything, and the good version of everything?”
Though the sector is growing, convenience store operators have been under pressure for years from discount retailers, e-commerce and other forces.
So they’re evolving with shifting consumer tastes and expectations. Also, with gas and tobacco as their top sellers, convenience retailers are looking to other products as those markets shrink.
While tech giant Amazon is shaking up the convenience model with its cashless and unstaffed stores, independent entrepreneurs are also innovators in the space; trying to cash in on consumers’ continued interest in specialty coffees, prepared meals and craft food products.
Szanyi opened PopBox Micro Market in 2015, picking up on the trend of U.S. startups offering consumers something more than simply being close.
“I think it came from a realization that there was this tired old market on the landscape that was ever present, decades old. That would seem to be hanging on with no vision,” he says. “There seemed to be a lot of room for a refresh.”
New idea, new products
About $56 billion is spent at the nation’s convenience stores annually, and 10 million Canadians visit one each day. Szanyi’s shop is just one of more than 27,000 in the country.
Located in a trendy Toronto neighbourhood just west of downtown, the store has a customer base that’s two-thirds female, from ages 25 to 45. Szanyi’s fresh food and hot beverage business makes him a competitor with local cafes and coffee shops.
Like a few eclectic dépanneurs in Montreal, Szanyi’s store is focused on a cool and curated customer experience.
Get lost. Gatorade. How about a bottle of organic cold pressed juice for $12? So long, soggy hot dog from the roller grill. Try the tasty pesto mushroom sandwich on fresh bread with organic red peppers, leafy greens and feta.
Oh, and need toilet paper? Forget those fluffy white kittens on a pack of Royale. PopBox’s brand is Seventh Generation, made from recycled paper fibres and whitened without bleach.
In fact, if Szanyi could find a more artisanal line of toilet paper, he’d stock it. His idea of convenience is about more than selling essentials: “I think that every item should be interesting.”
He says the approach is working and plans to open a second location within a year.
American innovators
Americans spent $650 billion at convenience stores last year and every day 165 million Americans — roughly half the U.S. population — go to one of that country’s 153,000 convenience stores.
The Chicago chain Foxtrot owns seven of those stores, and they’re quite a bit different from the classic 7-Eleven. For example, half of their sales come from online customers ordering delivery.
“You know, we sort of view Foxtrot as the future of convenience,” says CEO and co-founder Mike LaVitola.
He says he knows the statement sounds bombastic, but he believes Foxtrot has the right mix of essentials and impulse buys.
The stores carry soft drinks, paper towels, and toothpaste but also freshly made salads like cauliflower curry for $11, a chimichurri chicken sandwich for $10, and an entree like slow roasted salmon with braised vegetables paired with a bottle of an earthy California Pinot Noir for just over $30. There are also fancy pastries, cheeses, sliced meats, and a gift section; and all of it can be ordered online.
In fact, the business began as a delivery-only service in 2014 while LaVitola was working on his MBA.
A physical store was opened in 2016 to meet a legal requirement for adding alcohol to their product mix. It became a quick success and a cool local hangout.
“It was a happy accident,” says LaVitola. “We just simply had more space than we needed for the goods. And so we ended up setting up a little lounge area with, you know, couches and seating and a little coffee bar.”
Now all their stores have seating and stylish decor, with free Wi-Fi for folks who decide to consume the food and snacks, specialty coffees, or local craft beers on tap, on the spot.
The 50-50 split between in-store sales and online orders convinced venture capitalists to put $6 million into the business. Ultimately, the plan is for hundreds of stores.
Catherine Lang, a retail analyst with Kantar Retail IQ, says Foxtrot is a disruptive player. “They kind of deconstruct this long-standing notion of the greasy, the grimy, the grungy convenience store.”
For Lang, the mix of products and the restaurant quality dine-in or takeout food offerings all day offer solutions to time-pressed customers. Plus, even though “the rise of delivery services for grocery or meals inherently makes the act of going into a convenience store a little less convenient,” Lang notes Foxtrot’s local delivery fixes that problem.
It’s not the only chain offering a new and cool take on convenience.
Others, including Green Zebra of Portland, Ore., and Choice Market of Denver, show, in Lang’s words, “how urban convenience can really be tailored to more than just a bag of chips and a soda.”
Pennsylvania powerhouses
A pair of well established convenience chains in Pennsylvania have been creating a cool factor around their stores for two decades, while gradually adding healthier food and beverage offers.
Wawa has more than 800 stores in six states, and Sheetz about 600 stores in six states. Both empires are family businesses with sales numbers well into the billions of dollars.
Both companies were selling fresh custom made food orders by the 1990s, and both were early adopters of touch screen order kiosks for faster service. Now they have online ordering plus their own coffee lines, other private label products, and even store-branded craft beer.
The two chains’ evolving strategy and level of service have customers willing to buy store-branded T-shirts, hats and baby clothes, and that’s not the only way they show brand loyalty.
Wawa is well known for its hoagies, which have inspired a customer’s rap song.
Not to be outdone, a few loyal Sheetz Freaks who are in a rock band wrote and recorded a jingle celebrating the chain and its tasty treats, including mac and cheese.
And picture this: a pair of Wawa lovers who met at a store later had their wedding photos taken in its parking lot.
Wawa is from eastern Pennsylvania and Sheetz the west, matching the divide between Philadelphia and Pittsburgh’s pro sports teams. The fanatic customers of these brands are even the subject of a planned documentary.
7-Eleven and the Canadian contender
The big name brands in convenience are evolving too, changing their business models to offer more fresh prepared foods and craft style products, though at their own pace.
“They’re going to be running their own tests, they’re going to be addressing this for sure,” says David Soberman, a professor with the Rotman School of Management at the University of Toronto.
7-Eleven, the world’s biggest convenience store chain, has more than 68,000 stores in 17 countries. The company says its American operations have delivered record results this year, with fresh food sales a key part of that growth.
In Dallas, the chain has a test store offering made-to-order smoothies and tacos, an in-store bakery and dining areas. The retailer has also launched its own meal kits, a wine label Voyager Point, and an energy drink called Quake. It’s also started doing delivery.
Quebec-based Alimentation Couche-Tard now owns over more than 16,000 stores around the world after several years of buying up smaller chains.
Its stores outside Quebec are being branded under the Circle K label. It says expanding food and beverage service is a priority and that’s starting with burritos and baristas. Circle K has added a Mexican food service concept called Cantina to some of its stores in Ireland, and replaced some self service coffee kiosks with baristas.
Soberman believes a large chain like Circle K can successfully add cool products to its inventory and customize experiences in different markets.
“With the technological data-processing advances that we have, you can still, within a standardized format, deliver a tailored product line and a tailored offering. It’s much easier now because you can keep track of things. And you can be very efficient.”
Perhaps the most radical vision of the future for convenience stores, though, puts them on wheels.
Robomart, a California-based company, has designed a small self-driving electric low-speed vehicle that can be summoned from a smartphone.
In Shanghai, a Swedish company is testing its Moby Mart. That’s an autonomous solar powered shop on wheels. Customers open the door and pay for items with their phone, making the store like a portable version of Amazon Go. It promises a frictionless experience, but can’t offer freshly made custom sandwiches.
Soberman thinks the roaming store idea isn’t going far. “My guess is that this is more of a novelty than a big trend.”