Tuesday, March 21, 2017

Restaurants Quiver as C-Stores Leap Frog Grocers and Target Them

Customers, financial analyst, and legacy chain restaurants all understand just how successful the convenience store sector has been at garnering customers from legacy chain restaurants that stubbornly continue to do what they always have done and for the most part continue to do it the same way according to Foodservice Solutions® Grocerant Guru® Steven Johnson

Legacy grocery stores have capitulated food sales to the Dollar store sector and the Convenience store sector for 15 years with no end in sight.  Now with 154,555+ C-stores in the United Sates as the end of 2016 and most of them selling more and more grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food legacy grocery stores have simply fallen out of favor with consumers according to Johnson.  

Knowing that there are now 27 restaurants selling Ready-2-Eat and Heat-N-Eat fresh prepared food for every grocery store; C-stores are now targeting that sector with more fresh food and technology to speed service and drive down pricing according to Johnson. 

Two successful convenience retailers have upped the ante leveraging technology along with fresh food to lure incremental customers away from legacy restaurants and grocery stores at an ever faster pace.   Wheelys has new store that works entirely without employees as they integrated artificial intelligence that even greets customers. 

The other is Amazon and it new outlet Amazon Go.  As Amazon states Amazon Go "Our checkout-free shopping experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning. Our Just Walk Out Technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When you're done shopping, you can just leave the store. Shortly after, we'll charge your Amazon account and send you a receipt." Thus reducing cost to run the store allowing for lower prices in turn a larger Share of Stomach according to our Grocerant Guru® Steven Johnson. 

It’s time that the restaurant sector and legacy grocery sector look at evolving business models as the customer is dynamic not static and clearly the C-store sector is as well.  If the future has arrived for convenience stores and it does not require staff to manage the shelves or to take care of the register as is the case a Wheelys the competitive landscape has changed dramatically. 

Wheelys currently has two Wheelys 247 stores, one in Sweden and one in Shanghai, available to the public. These locations remain open for 24 hours throughout a week. An employee of the store only has to restock the merchandise on the shelves to take care of the store, and potentially clean up anything should a customer cause a mess.

The Amazon Go internal testing is complete albeit as with anything Amazon system tweaking will continue endlessly.  I have it on good authority that Amazon is simply awaiting approval from Washington State regulators for a liquor license so they can also sell alcohol when they open their doors to the public. Amazon Go could open to the public at any time once the liquor license is approved.  
Wheelys plans to license other Wheelys 247 to entrepreneurs interested in running their own business with more information on their website. As for Amazon they might or might not license their technology to other retailers.  One thing is for sure the speed in which a customer can get their prepared meals /  food, groceries, and sundries is being reduced and the price the items will be so competitive lacking the cost of labor that other retail sectors not acting dramatically just might be in peril.

Retail analyst Canaccord Genuity recently downgraded Sonic Corpon increased competition from convenience stores.   The halo of “better-for-you” was not enough to save Sprouts Farmers Market as operating a fresh food outlet focusing on simply “better-for-you’ food was not enough and Sprouts may now have to sell itself to survive.

Consumers are dynamic not static they understand that CPG foods sold as fresh are not.  Legacy grocery stores are fighting a losing battle if they think they can continue to tell that story and sing that song.  Restaurants are fighting a losing battle if they think that they can continue to run restaurants the way they did 10 years ago and simply raise prices to gloss over lost customers. They can’t. 

Are Convenience stores leapfrogging your company? Are you losing customers year over year?  Just remember customers are dynamic not static and your company must be as well. The price, service, value, equilibrium in foodservice retail is being disrupted by companies looking too new business models.  Is your company evolving fast enough?  Does your business model look more like yesterday than tomorrow?

Success does leave clues and since 1991 Tacoma, WA based Foodservice Solutions® has been leaving clues to success for all.  Do you need or would you like Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.   Contact: Steve@FoodserviceSolutions.us or 253-759-7869

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