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What are C-stores to make of Amazon’s foray into food retail?






Amazon continues to transform its company identity and reshape industry after industry it enters, a trend that took on new levels of media frenzy in June when CEO Jeff Bezos announced he was acquiring Whole Foods, the nation's leading health-conscious supermarket chain.

All told, Amazon now owns 431 Whole Foods grocery retail stores across the U.S., with most congregated in urban centers where demand for healthy food options is high and consumers have the income to pay premium prices.

Though there are a number of factors that went into the acquisition – Whole Foods' declining stock price, for example – the initial shock of a sale of this size sent waves throughout the retail sector, with many grocery store operators wondering when the time would come when Amazon came knocking at their doors as well.

At root, perhaps, is the demand for convenience, which is Amazon's expertise. Speedy, free shipping; online shopping and live video streaming; and access to nearly any product in the world are the hallmarks of the company's business model.

So what impact will Amazon's convenience blueprint have on C-stores now that it's clear the company is bent on revolutionizing how consumers transact with businesses of every stripe?

A history of tech disruption
Amazon is no stranger to gutting old business models and creating new e-commerce paradigms.

From its beginnings in 1994, the company was one of the first platforms to capitalize on the growing internet boom. Bezos targeted five specific consumer products that could be marketed and sold online more seamlessly than in stores, which were:

  • Books
  • CDs
  • Videos
  • Computer hardware
  • Computer software

The rest, as they say, is history.

After displacing retail giants like Circuit City, RadioShack, Borders Books and Barnes & Noble, Amazon expanded its services further by offering a cloud-based platform to companies of all sizes, Amazon Web Services. Plus, its Amazon Prime subscription service means free shipping and exclusive live streaming for customers.

More recently, Amazon has overhauled warehouse and supply chain management with its use of autonomous robots and drones that can grab, compile and deliver customer orders without the guidance of human workers.

And in June 2017, the company made its biggest splash yet through a $13.7 billion deal with Whole Foods, which most business leaders have interpreted as a move to compete not just digitally but physically against other large chains like Walmart.

Needless to say, businesses that operate in any space that Amazon has a grip on are likely hard-pressed for ways to corner market share, and C-store owners may feel the same.

Putting the convenience into convenience store?
The lurking encroachment of Amazon may seem all-encompassing to business owners skating by on narrow margins and tight budgets.

This sentiment may be especially pervasive for C-store owners, as many operate chains or several locations at once in varying proximity to one another. But what sort of impact would convenience stores feel from the supposed Amazon effect?

For starters, Amazon has proven capable of moving the goalposts of customer expectations. A decade ago, same-day, free delivery wasn't really an option. Today it is. The average consumer (at least younger ones) must feel that their needs are being catered to much more appropriately and they now expect the highest customer service standards when they interact with every business, not just Amazon.

C-stores are heralded for their quick, grab-and-go model, and it works. The National Association of Convenience Stores reported summertime is an especially lucrative time for C-stores due to more people hitting the road – they inevitably stop in to refuel their cars and their appetites.

Similarly, the millennial generation eats out five times a week and buys coffee three times a week. Their frequency mostly comes down to habitual purchases (small meals, snacks, beverages), which are all items that are purchased often at C-stores.

While there is room for some level of automation (Amazon's forte) in terms of checkout and inventory, RetailWire writer George Anderson noted the biggest disruption to C-store models could be Amazon's newest venture into fresh foods.

The healthy living craze isn't a new one to C-stores – many have already stocked their stores with organic produce, craft coffee, healthy energy bars, quickservice, freshly prepared meals and other nutrition-conscious offerings. But the Amazon effect may force slower-moving C-stores to begin providing healthy foods as well, making it a nearly ubiquitous trend across the food retail industry.

If Amazon decides to jump headfirst into purchasing C-stores as well, then the service offerings could be shifted to more readily accommodate Amazon's current customer base as well as build upon the existing habits of the average C-store shopper.

As Anderson puts it, "[Amazon] would stock a variety of dairy, meat, produce and other perishable items that customers could take home with them. The idea is to capture those customers who like to make quick stops to pick up small orders of groceries on their way home from work."

Anderson went on to explain that anything not immediately found inside the C-store could still be purchased through Amazon Prime and delivered the same day – a truly end-to-end customer experience that melds well with how C-stores are set up to operate.

According to Digiday, these shifts could be transformational, but not necessarily due to physical stores or digital platforms. These types of business changes are occurring as a response to customers' refined shopping habits. And in that sense, the more consumers become accustomed to touchscreen shopping carts and same-day delivery, the more industries of every kind will adjust their sales and merchandising strategies accordingly – and that goes for C-stores, too.

Just how far-reaching Amazon's latest disruptions will go is still TBD. But C-store owners and managers may find it practical and forward-thinking to closely examine their customers' habits and review their own service offerings to identify ways to make better use of their bottom lines.

Downstream Petroleum News provided by FireStream WorldWide, intuitively automated software solutions for the downstream petroleum industry. Go see a one-minute video to see how Ascend Retail can give a competitive edge to your C-Store operation.