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Mar 15, 2021

In this episode of COMMERCE NOW we discuss fuel and convenience and how things have changed and continue to change and what fuel and convenience retailers need to do to keep up with these changes.

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Nielsen Survey: Retail Personas

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Jerry Langfitt
Reint Jan Holterman


Jerry Langfitt:                     00:14                     Well, everyone. Thank you for joining us today. I would like to welcome today's guest RJ Holterman. Who works with a fuel and convenience group at Diebold Nixdorf. Welcome RJ, thanks for joining me today.

RJ Holterman:                    00:24                     Thank you, Jerry. Thanks for having me today, I'm looking forward to this conversation

Jerry Langfitt:                     00:29                     Today, we're going to talk about fuel and convenience and how everything has changed and how everything is still changing. And what fuel and convenience retailers need to do. RJ, what do you see happening in the fuel and convenience market today?

RJ Holterman:                    00:43                     Well, I think like in other segments of retail, we see a huge transition going on. And with saying that, I think in the end convenience stores are unique, but no longer really separate or set apart from the other types of stores. And especially I think in today's challenging economic environment, you'll see that fuel and convenience retailers are facing a critical inflection point. If you just look at, for instance, the number of people driving less in the US, one reason study found that more than 60 million Americans had stopped commuting. And that the numbers of people getting gas once a week had fallen by almost a third compared to the pre pandemic months of January and February, one year ago. So at the same time, an increase in the oil supply has triggered a significant drop in oil prices. And as demand for fuel remains low, fuel and convenience store retailers must adapt in order to survive.

Jerry Langfitt:                     01:37                     So with convenience sales that I've read are up. Most of them have grown, most of the store count might've stayed either the same or just slightly off compared to fashion retailers. What's going on and how is COVID 19 affecting how people are reacting to the benefits of a convenience store?

RJ Holterman:                    01:58                     Yeah, I think especially now with this whole pandemic, people who do leave the house or even are allowed to leave the house in some countries. Typically prefer to keep the distance from other customers and store staff. So that will lead them from, let's say the very crowded and big grocery stores and supermarkets and they rather would visit a smaller stores with less people in it. So they have less chance or lower chance to contract COVID. So you see that people will visit convenience stores more rather than the big supermarkets.

Jerry Langfitt:                     02:32                     Well, with the fuel industry in transition and rapidly needing to do more than just fuel. How do they need to really look at this and change their operating model or what their goals are?

RJ Holterman:                    02:44                     Like you'll see is that, the fuel industry is rapidly moving beyond the traditional forecourt interactions. And retailers seek to offer additional services, expanded services in order to achieve a one-stop shopping experience. While adapting, their business model from fuel plus to plus fuel. At the same time, consumers expect a seamless shopping experience that can start at home or on the go or wherever they are and then continue at the petrol station. So it's not just they visit the store, but typically journeys have started hours, minutes, days before they entered the petrol station. And this also requires retailers to be able to combine lets say, the offline with online journeys.

Jerry Langfitt:                     03:28                     So there's a lot of changing consumer behavior, as we've already talked about with COVID. But there's also just, people are seeing the need for convenience even more now. How can we react or what are we seeing with that changes in the consumer behavior?

RJ Holterman:                    03:42                     What we are seeing indeed is increased demand for new ways to shop. So that's online to offline. But also think about people who order products, but want to pick them up at a convenient location. So curbside pickups and desire for low touch interactions with staff or with other customers even. So that also leads to new ways how people want to go in about store. So with higher needs for self service, with new digital ways to pay, in the end people want to have more control over their own shopping journeys. And that's also very relevant, I think for C stores.

Jerry Langfitt:                     04:23                     That's really interesting. Because when you say relevant for C-stores not that they've kept themselves apart, but they're a separate industry. But the greater retail industry still affects them from grocery stores, to big box. And C stores need to look at how to gain those new understandings with the consumer. So that's really interesting to hear.

RJ Holterman:                    04:44                     Yeah, I think so too. Last year, at Diebold Nixdorf, we work together with Nielsen to do a survey with over 15,000 consumers in 15 countries. To find out different shopping patterns and also the impact of technology on that. And in the end, how can retailers help these customers or these shoppers to improve their overall shopping experience. And it's a long study. You can download it on a Diebold Nixdorf website if you want to. But what I would like to highlight there is, that we in the end found that there're six different personas or types of consumers across the board. And one of these personas that we eventually called aspirational tech fans. We found those are typically the young urban people sociable. Always chasing for the latest trends and continues to looking for new experiences that they can share them through the favorite social channels.

                                                                                And at the other end of this spectrum, you will find what we call the well-balanced traditionalist. These people tend to be very content with the current approach to shopping and have no desire to engage more frequently with technology. Interestingly enough, both aspirational tech fans and the hesitant potentials show the largest preference for C stores for doing the shopping trips. For instance, these aspirational tech fans hate waiting in line. And being in a constant hurry with a fast and furious lifestyle. The busy jobs and hobbies and friends, well life in general, you can say. And based on the 15,000 consumers we surveyed, we noticed that about two third, 62% of this group, visit a store just for immediate consumption.

                                                                                That can be a coffee or fresh juice or a snack or a fast food meal. And they typically consume it in a quick serve restaurant. And about the same amount, 58% also do top-up shopping several times a week. And they are most likely to do it in a C store nearby because that's more convenient for them saves time and well in the end, they have smaller baskets shopping trips, but they do it several times a week.

                                                                                The same you will see also with the hesitant potentials group. These are typically people in their mid thirties, still working hard to build the careers, very much focused on the professional goals. And also spending a lot of time on the jobs. They want to cut back some time on let's say the shopping activities, et cetera. So also these people are frequent C store visitors and doing a lot of top-up shopping as well, around 60% as well.

Jerry Langfitt:                     07:24                     What's interesting I find is and I was recently looking at the same study, but admittedly I'm pushing 50. And I forget that millennials, while we talked about them for a long time are 25 to 40 years old. And a lot of retailers always, I don't want to say dismiss them, but we still treat them with, I think the wrong viewpoint. They've been waiting for them to become the biggest spender. And I think that's already here. So while retailers and C-store operators can continue taking care of the older generation, who's used to everything exactly how it is. I think it's becoming more critical for them to really pay attention to where everyone is going. And it's not when millennials become the largest spenders that's already here. And with our kinds of implementations, you need to meet them before they're ready for it.

                                                                                So I think It puts retailers on notice that they really should look at this because this is not merely a growing population, but it's already here today. In the US we see the role of convenience stores growing in popularity as well. Just convenience in all of these groups becomes more critical. I just don't want to spend time or get friction. I just need to get in and get out the best experience as possible

RJ Holterman:                    08:37                     For sure, that's completely right. I think a resent study carried out by NACS, underpins this attitude or this behavior as well. According to a survey of US convenience store owners, the sales of convenience items have remained strong during the first three quarters of last year. While fuel is still catching up for the reasons we discussed earlier. So in fact, more than half of the respondents said that in-store sales through the first nine months of 2020, were higher than the same period, the year before. And even still, almost two thirds or 64% said that in-store sales were up in September compared with last year. So you see a strong need and actually a growing demand for C stores, convenience stores across the globe, but particularly also in the US.

Jerry Langfitt:                     09:27                     Well, when it gets right down to it, how is fuel itself changing? And changing how C stores need to look at their environment and what they provide?

RJ Holterman:                    09:36                     That's the interesting question, Jerry. I know we've all been talking about fuel plus to plus fuel and it's something out there in the market. But maybe I can make also a few comments on the fuel itself. One important driver, I think that's changing the mobility market, is also the ecological sustainability. So the fuel market, but also the car manufacturers are currently investing in this, to make the transition from traditional fuels to electric charging and more recently also to e-fuels. So the focus is on reducing the environmental impact of cars and trucks. And while electric charging is more environmentally friendly than traditional oil based fuels, it will not be the long-term answer to ecological sustainability. Electrification certainly will be part of the solution. Especially if the electricity is coming from renewable sources, such as wind and solar plants. But there are also limits to electrification.

                                                                                The pace of electrical vehicle adoption depends not just on the consumers and commercial transportation companies buying these vehicles. But also the availability of materials like batteries and other components is a factor of influence. And research shows that even in the best case scenarios, only half of the car sold by 2030, so let's say in the next 10 years, would be fully electric. The bottom line then is also that by 2050 even, almost 50% of passenger cars and 70% of heavy duty trucks. Still will be partially powered by combustion engine. And the rate of replacements by electric vehicles simply isn't fast enough. And now what's very interesting to see, is that a number of car manufacturers and fuel companies realize this and they are now betting on the e-fuels. Which is a different type of fueling, it's based on organic matters. That's towards deep in the earth. And it's a carbon neutral alternative that's becoming available at a more rapid pace where at least that's what we expect.

                                                                                And in the end, if e-fuels will reduce carbon dioxides to footprint CO2. Footprint of existing cars and they will replace petrol and diesel without modification. And also very important, fuel stations or fuel retailers can use the same infrastructure they have today. One company that's for instance, is very active in this space, is Porsche. Interesting to see that they are betting on the e-fuels. And there's only one issue right now with e-fuels, that's the price per gallon is about 15 times higher than traditional gasoline. So it will take some time before it becomes, let's say economically viable. But as with most other things, that's just a matter of research and development, as well as scaling up to production to get higher efficiency levels. So all in all, it's promising technology

Jerry Langfitt:                     12:33                     That is really interesting and I'm excited to see electric cars take over in America, as well. As what they're trying to do in Norway. But for now coming back to the fuel plus to plus fuel transition and having to deal with the fuel pumps as they are. How do you see the development of the role of the store at the pump and how much people can do at the forecourt?

RJ Holterman:                    12:57                     Yeah, I think eventually we'll see that the service stations will develop into becoming sort of a community hub. So it's a place not just to fuel up or recharge your car, but also place to work. Maybe we have wifi access and smart consoles where you can sit down, bring your own laptop and smart devices with you. And while enjoying a cup of coffee and a sandwich, do your work. Also, it will become a store with pickup points for goods ordered online, maybe even while you're on the go or waiting for the traffic lights or the product and then pick it up one hour later, when you are in the store. These will not just be the traditional click and collect e-commerce goods and online or the groceries and et cetera. But think also about pharmaceuticals products on prescription, maybe delivered via drone or by a courier to the safe located inside the C store. Which you then can pick up afterwards.

                                                                                Or cafes food facilities, a choice of meals for your lunch or dinner, as well as food to go. If you prefer cook at home yourself. And even in the longer term, you can think of these type of stores because you will spend much more time there. It's not just in and out, but you'll spend part of your day there. That these will have maybe indoor outdoor playgrounds for kids and have a place to unwind for the grownups. And think about rooftop gardens, whatever, where you can sit, meet other people, read the newspaper or simply drink a coffee. Those are the things that eventually service stations will turn into a community hub where you do much more than just fuel up your car or get your car washed. It's become part of daily life I would say.

Jerry Langfitt:                     14:39                     I agree. I mean, it ends up being that hub, it's convenient, it's near everybody. There's lots of them out there. Way more C stores than there are big box or grocery stores, just for the nature of what C-stores always meant. You talked a little bit in the beginning about adaption. Is that because consumers are also changing?

RJ Holterman:                    14:59                     Yes indeed, consumer's needs and preferences, I would say ever-changing. And as a result, fuel and convenience retailers also need to become agile or need to adopt agile strategies that deliver more than they do now, to services to keep that consumers engaged?

Jerry Langfitt:                     15:17                     So what do we recommend you should look at?

RJ Holterman:                    15:20                     I think there are several ways for fuel and convenience retailers to drive a more successful customer engagement strategy, if you will. I think first of all, maybe shift the focus to services beyond fuel. So the fuel plus to plus fuel change. So some fuel retailers are already expanding the offerings in new ways. Such as introducing recharging hubs and on the go food services and adopting a plus fuel business model. Requires a flexible approach that can be modified and scaled to meet consumers future needs. Another area where or to focus on, is to create a seamless shopping experience. In the end, I think a new era for retail is dawning and the role of physical stores is changing as consumer preferences also are shifting increasingly towards digital shopping journeys.

                                                                                And today's consumers simply expect a seamless shopping experience that can start basically anywhere at home, on the go, somewhere online. And then continue at the fuel station. And in order to deliver these type of experiences, retailers must have the capability to integrate the online and offline consumer journeys. And retailers should focus also on an increased demand for essential items. Connecting with consumers to drive a personalized experience and embrace the shift towards online shopping.

Jerry Langfitt:                     16:49                     What can we do to simplify consumer journeys? Usually it's by removing more friction, that's one place you tend to start. What is something that a retailer could maybe strategically focus on?

RJ Holterman:                    17:01                     I think in the end, visiting a convenience store can be so much more than just a pit stop. Especially also now during this pandemic that's going on. Now more than ever, consumers are looking for a quick and safe shopping options. And like I said, at the beginning, C stores are often less crowded than other retail environments. And they are designed to help customers get in and out quickly. To capitalize on these built in advantages, retailers could or maybe should consider investing in advanced flexible technology that allows them also to further simplify the journeys and remove friction. For instance, by introducing self-service checkout, by offering loyalty programs that increase personalized engagements. By offering cashier less stores and even consider home deliveries and those types of activities. So remove the friction by simplifying customer journeys.

Jerry Langfitt:                     17:55                     When it comes to a retailer's IT infrastructure. They really have to look at it from a different perspective. Because a lot of their old technology might be inflexible. And they need to kind of take a new paradigm and say, "okay, I need to create agility. I need to create the ability to be more nimble." That seems like what they need to do. Isn't it?

RJ Holterman:                    18:17                     Yeah, I fully agree. I think the key to successful in the modern retail area is all around flexibility and adaptability. So flexibility in inventories, flexibility in store location and layouts, flexibility in opening hours. And also the level of self-service available to a variety of consumer to accommodate these differences in consumer demands and preferences. And IT infrastructure is a key enabler for that. So fuel retailers for whom agility and flexibility are important, could look at the following criteria to when evaluating IT solutions. So for instance, the level of flexibility and adaptability, the capability to integrate with existing IT solutions already deployed. How easily they can scale up and scale down if needed. And of course also the cost efficiency.

Jerry Langfitt:                     19:14                     Okay, so what can a retailer do today? What steps will take them to this? What we feel is this C store renaissance, where people are starting to realize the value of C stores being more plentiful and located near them and quicker access.

RJ Holterman:                    19:33                     I mean also without making too big an investment. The first and probably also most easy and logical step for many fuel and convenience retailers would be to remodel their current stores. And maybe a few ideas to help you get into the C-store renascence renaissance. First of all, you can streamline your convenience stores layout. Think about that longer browsing times can mean more purchases per customer. So what traditional C-store designs often discourage browsing as they are very tightly packed, tight aisles, crowded checkout areas and shelving the blocks, sidelines. So improvements that maybe are easier to complete are wider aisles, so customers don't feel crowded and don't feel rushed.

                                                                                And have multiple checkout areas throughout the store, including also maybe some self checkout registers. Well these avoid long lines that may otherwise negatively affect traffic close inside the store. Maybe also very simple and down to earth, keep trash out of sites and make sure that your bathrooms are clean and cleaned frequently. Because that's one of the things people may sometimes forget. But that's also a key driver for people to stop by at the C-store official along the highway, they need to go to the bathroom.

Jerry Langfitt:                     20:55                     I do know... Not to interrupt you, but in America, someone did put an app together. And you can actually be on the road and look for bathroom ratings at convenience stores. So you can find the cleanest one, the nicest one, the most outfitted one and see how close you are to it. It was something that happened a couple of years back once the iPhone and the mobile apps started to be so popular. I can find any information I need based on my own preference. So you're absolutely right, that those are incredibly important.

RJ Holterman:                    21:25                     Bathrooms are important driver in customer loyalty because people love to come back to a clean place. And I can imagine this app is really helping them and fostering this loyalty also in an easier way. Another way is also where do you put popular items in your store? If you put them in the back, they have to go along the way through the store. And also maybe more likely to pick some other items that they see on the shelves. And by eventually spend more in your store.

Jerry Langfitt:                     21:55                     When it comes to hot food and beverage stations. I mean, how can someone differentiate their store? I mean, food is without a doubt, one of the largest growing section or features a C store can offer. It's just exploding with what you can now get in a C store. That's a great experience. I know my son loves eating at the C-stores that's around our house. I mean, that's his regular place. What more can a C store operator do?

RJ Holterman:                    22:21                     Well, you can imagine if you only offer, let's say the basic like chips, candy bars and soda, then your customers will have little reason to consistently return to your store. Right? They can go to any other store as well to get that. But if you can use your C-store remodel, so to say, to add more something, the other guys don't offer. Think about fixing bars to let consumers customize their food of choice. Whether you sell nachos or fries or hotdogs. The ability to customize one of these classics with a range of fixings is one of the best ways to get people excited about your store. And adding fixings is also simple way to increase the sales while offering them at a higher price. Another thing is how to... Coffee is a very important driver.

                                                                                So revamping your coffee station and offering different types of brew, as well as options like cappuccino and tea, that also will help you step up and increase your sales. And the last thing you could also think about is maybe it's also partner with the food chain. So we'll see now that many national change are eager to team up with convenience stores. Offering customers, the favorite food, in addition to the other staples they need. And this could give you a big leg up over your competition.

Jerry Langfitt:                     23:42                     Well and then finally, when you have to look at their registers area and the point of sale. Is really where it's at, when it comes to plus fuel versus fuel plus, what can I do with that area? Kind of towards the end of the journey.

RJ Holterman:                    23:56                     Now, one thing that's, I think fairly easy to achieve. And then also with low cost is installed lighted signs above the checkout area to promote a selection. So not too many, but just a small selection of high margin items so that people will see it when they are at the register. Also think of adding small display cases to the register area, to make some sale items more eye-catching. This can also include display cases at self out registers if you have them. Or maybe even more so, at self out registers. Because people then tend to feel they have more time to make the selection. They don't feel rushed because they have a line of people waiting already behind them. So they can pick their choice and in the end spend more per visit.

Jerry Langfitt:                     24:42                     Well, that's definitely what every retailer truly needs. I need more visits from the same people and I need larger basket sizes. And the kind of look at that consumer over the life of the relationship that I have with them. Okay, so what can a retailer in the fuel and convenience industry do today to become more fit and flexible and more agile in their environment?

RJ Holterman:                    25:05                     Yeah, I think that the single most important differentiator in fuel and convenience retail and maybe it goes for the entire retail segment as well, will be adaptability. So the retailer that is most adaptable, most adaptable to change will most likely also increase market share and grow the business the fastest and the best. And the extent to which a retailer is able to continuously adapt to new innovations and to changing consumer demands, ultimately also decides who stays in business and who will fade away. This is also and it's not just something that I say. Also, if you go to Forrester research, for instance, they also stress this particular part of adaptability in a recent report that they published.

                                                                                And they say adaptability, which is the ability to understand and anticipate market dynamics and exploit opportunities big and small, as soon as they arise. Maybe then logically, the next question becomes, "well, how do I do this? How do I become more adaptable?" And well, I can say there's no silver bullet that magically turns a traditional retail organization to a highly adaptive one. But there may be a couple of things to consider as a retailer that are critical to long-term business success.

Jerry Langfitt:                     26:24                     It sounds like referring back to our Nielsen study, there's a need to take care of the techno-savvy the people that want new journeys. How is that going to... I mean, one would think that we would have to have some kind of, I need to digitize the store more.

RJ Holterman:                    26:39                     Yes, I think so, too. And well, what we see is that retailers are continuously adapting their checkout mix, if you will. So the checkout infrastructure to better serve a consumer base, that's more familiar with various checkout options. And that this can range from self service and assisted service also to mobile scan and pay for example. Click and collect curbside pickups and even consider, even though it may sound very futuristic, it's already happening in some places, drone based home deliveries. So in the end, I think it's important also for retailers to embrace a modular approach that includes the complete ecosystem of hardware, software and related services. And that gives them a choice to implement what fits best with their specific customer base to reduce friction in consumer and staff journeys. And at the same time, also of course, very important, lower the total cost of ownership for these type of solutions and for the stores.

Jerry Langfitt:                     27:40                     So typical IT infrastructures and I'm going probably back a few years, dating myself. You would implement something, you would have a pretty rigid infrastructure and that would prevent you from... Or maybe not prevent you, but just make it really challenging to add new features, functions, new journeys. How does a retailer need to foster a bit more openness when it comes to their retail IT infrastructure?

RJ Holterman:                    28:02                     In the end, openness is very important because as a retailer, you want to offer consumers the end to end connected shopping experience that they expect. What your consumers expect. Regardless of whether the journey started at home, on the go or in the store. And an open technology platform with a set of standardized APIs for faster and easier integration, will allow you to adapt to upcoming technological innovations more easily by employing an collaborative multi-vendor strategy. So you don't want to put all your eggs in one basket with one vendor, but rather see best of breed solution in a collaborative fashion using standardized and open APIs for that.

Jerry Langfitt:                     28:46                     Interesting, I definitely feel that the APIs and a lot of what retailers are using from an integration standpoint makes things maybe not easy but easier. And it's definitely how they can be more adaptable moving into the future. Interestingly enough, as you put new journeys on the need for everything to really work and always be on and available to consumers becomes critical. You'll never get a second chance or a third chance to prove to someone that a new journey is really going to be more convenient for them. It seems like they really have to, after implementation, you've got to make sure that going for adoption, you really support that new journey and that new technology.

RJ Holterman:                    29:26                     That's completely right. It's very important that consumer and staff journeys are always up and running. And of course that they are secure. So this requires a combination of remote and proactive service model. So think about proper system monitoring, extensive data sharing on system availability and making intelligence correlations. So using a correlation engine to connect the dots and facilitate also root cause analysis in case something does go wrong. Combined with remote support services, this will maximize your gains and ensure that you can guarantee a very high availability of your online and offline customer interaction points.

Jerry Langfitt:                     30:06                     Thanks, RJ. I think that's a good place to close. Really appreciate you sharing your thoughts and how fuel and convenience retail is evolving. And thank you to our listeners for tuning in to this episode of COMMERCE NOW. To learn more on our FCX offering, please visit,