Opportunity knocks

From AI to retail media, private label and beverage alcohol, here’s what will define the year ahead.
Chris Daniels
Contributor, Convenience Store News Canada + OCTANE
male writer Chris Daniels
Opportunity Knocks Graphic

Get ready for the trends and developments expected to shape the c-store industry in 2024. Think generative AI. In-store digital signage networks. The continued proliferation of store brands nationwide. And (in Ontario) the sale of beer and wine. The year ahead will offer plenty of opportunity—here’s what you need to know. 

Store brands: Private label levels up

Store brands have shed the stigma of being inferiorly made. While still offering low prices, they are comparative in quality to national brands—and in some cases, outselling them! “We are competing and sometimes winning against national brands,” says Leslie Gordon, director of proprietary brands at Circle K. Recent additions to Circle K's portfolio of proprietary products include triple chocolate cookie bites, roasted salted pistachios and spicy dill potato chips. Gordon, who talks in-depth about Circle K's proprietary business in our Q&A (please see sidebar), says, “Our plan is to launch more store products in 2024.” 

Rather than just appealing to value-focused shoppers, a study released in December from the Private Label Manufacturers Association indicates c-stores have “a big consumer opportunity” to appeal to Gen Z with their store label. “Our study revealed that 64% of the Gen Zs who responded said they ‘always/frequently buy’ store brands,” says PLMA president Peggy Davies

With Gen Z shoppers making more frequent visits to c-stores than grocers according to PLMA’s research, Davies says c-stores should also look to expand their store brand to include “frozen and freshly prepared foods,” including natural, organic and plant-based items. “However, it’s not just food,” she says of categories to consider, noting PLMA’s annual private label trade show in November saw “non-food suppliers expand by 40%. That signals to us an increase in retail interest,” says Davies. “So, non-food opportunities could include small electronics, health and beauty, and household products.” 

“There’s infinite opportunity knocking for store brands in the c-store channel,” she concludes.  

As for national brands? Expect them to up their promo game. “National brands have to justify why they are more expensive,” says Bruce Winder, Toronto-based retail analyst and author. And so, expect “more price promotions or buy one get one promotions to combat private label.” 

Scott Simmons
Scott Simmons

Beer: Ontario’s long-time coming attraction

In December, Ontario premier Doug Ford made good on his commitment from 2018 and announced that starting no later than January 1, 2026, the provincial government will allow for the sale of beer, wine, cider, coolers, seltzers and other low-alcohol read-to- drink beverages in convenience stores.

It's a huge and hard-fought win, but the work has just begun. Operators are already prepping to welcome the new category. C-stores in Ontario have been extending their walk-in cooler space and/or introducing soda fountain dispensers in the event soft drinks need to take up less refrigerator real estate, says Chris Midbo, head of sales, marketing and new business
development at Edmonton-based Western Refrigeration. 

“The biggest issue in Ontario, especially in urban centres, is store formats are pretty small. So as great as this could be for them, the challenge for owners is facilitating the needed refrigeration, as well as addressing storage space in the back.” 

Retailers aren't the only ones celebrating. 

“Many craft brewers have long wanted the opportunity to sell their products to local convenience stores, and other local, retail outlets, and this is a big step in giving them that opportunity,” says Scott Simmons, president of the Ontario Craft Brewers Association. “That’s why it is great to see government is mandating dedicated shelf space for craft beer in c-stores, which is something convenience stores support, as well as continuing to prevent stocking fees so that consumer choice deter- mines what is on the shelves.” 

Given craft breweries have seasonal rotations and collaborations with other breweries and are getting into emerging categories, like low alcohol and gluten-free beer, he says the category has options for every adult drinker’s taste. “Our message to c-store owners is to embrace craft and put in the effort to become a craft beer destination in their community for locals and visitors alike,” says Simmons. “I would encourage owners to begin outreach to their local craft brewers to build that partnership and be ready to get their beer on their shelves quickly, as we only see this being successful if c-stores across the province become champions for craft beer.” 

Arsen Avakian
Arsen Avakian

Retail media: New visual heights

2024 is looking to be the year more c-stores adopt data-driven high-impact digital signage.

Adapt Media has recently signed on INS Market and BG Fuels, growing its advertising network to more than 10,000 c-stores nationwide, with each location either tapping into its network via 50-inch traffic-facing screens in their windows, static posters on the walls or digital displays found at POS. That includes thousands of independents and 2,000-plus Circle K locations nationwide, as well as Hasty Markets

Adapt Media pays a c-store a rental fee to have their digital screens join its network, and a store’s revenues also benefit from any incremental sales the screens drive. The network has been used by the likes of the Aboriginal Peoples Television Network, Ontario Lottery Gaming Corp and Coca-Cola to communicate messages to people passing by or coming into the stores, whether it be for a new product launch, price promotion or contextual messaging.

“We command all the screens from a central point, with the ability to shut them off when the store closes, and to understand exactly when the ads are running and for how long,” says Jamie Thompson, CEO of Adapt Media, which recently celebrated its 25th anniversary. “We also have data to calculate the impressions reached.”

Ads can be purchased on a programmatic basis—for instance, a buy of inventory near high schools and university campuses that runs only during lunch hour. Adapt Media also offers takeover activations, since it also sells static ad formats like window and floor decals, cooler clings and counter promotions, which can be combined with the digital screens for an immersive ad buy. Scotiabank is among the marketers who have executed takeover activations.

Adapt Media is also working with retailers, including INS, to get more granular in their targeting. “We are overlaying transactional and loyalty data, as well as other sets like historical data, to understand customer buying patterns and drive new purchasing behaviours,” explains Thompson.

Chicago-based Cooler Screens is another fast-growing provider of digital media, having created technology that takes existing surfaces, like glass cooler doors, and turning them into smart screens that adapt to consumer behaviour and data-driven context.  With professional lighting and high-quality photography, it can display product behind the coolers with greater clarity, and highlight information like a product’s nutritional information, for instance.

It is currently doing a pilot project with Parkland in Canada, but results with stores in the U.S. have found cooler screens achieve a 3% to 5% incremental same-store sales lift. In the U.S., Cooler Screens has more than 11,200 screens in over 760 locations.

“I don’t see why a Coca-Cola or Pepsi should ever spend a dollar outside the store—they should give their money to the retailer, because the eyeballs that come in day in and out can be influenced at point of sale,” says Cooler Screens CEO Arsen Avakian, who created the company after founding Argo Tea in 2003 (and sold in 2020) and never really knowing which half of his advertising spend was well-spent.

Helene Desmarais
AI: From creating marketing at scale to the metaverse, it’s a new world for c-store operations of all sizes

 Think AI is something that only big chains can leverage to improve their operations and in-store experience? That may have been true, but not in 2024.

“While economies of scale and large budgets often favour large retailers, the evolving landscape of AI for retail now provides more accessible options for smaller businesses,” says Helene Desmarais, chairman and co-CEO of IVADO Labs, a Montreal-based software consulting firm which harnesses AI methods to solve supply chain needs. 

“There are also funding grants and subsidies businesses can apply to both provincially and federally for adopting AI,” says Maxime Cohen, Scale AI professor of retail and operations management, director of research at the Bensadoun School of Retail Management at McGill University, and scientific advisor at IVADO Labs. The Bensadoun School also operates a working Montreal-based store lab in partnership with Couche-Tard. 

CSNC spoke to Desmarais and Cohen about the ways AI can be used by c-stores.

Digital marketing

You might have heard of a little tool called ChatGTP—short for “generative pre-trained transformer,” the chatbot can do everything from write college essays and create custom images to solve complex math problems. It’s free to use with a simple web interface.

It can also help independent c-store owners and smaller chains punch above their weight when it comes to their marketing output. “Everything related to digital marketing can be done amazingly well and much more efficiently and cheaply than ever before,” says Cohen, “from advertising campaigns, optimizing social media, SEO and even creating visual assets for flyers.”   

“This new technology reduces drastically the cost of such campaigns and is hence accessible to small retailers and SMEs,” agrees Desmarais. 

Planogram optimization

“The advantages of AI for retailers extend beyond corporate office functions, into enhancing store operations,” says Desmarais, both for large and small c-store chains. “The maturity of AI offerings and the availability of open-source tools have led to the development of frameworks and pre-trained models that can be fine-tuned and tailored to the specific needs and scale of smaller retailers.”

One notable application?  “The optimization of planograms, where AI can significantly boost the efficiency of replenishment operations. This leads to a reduction in the frequency of fill trips required to restock aisles, aligning more closely with demand patterns and optimizing product facings,” she says. “The result is an improved overall customer experience marked by well-maintained shelves and a more efficient shopping environment.”

AI can also help with planning decisions around new product introductions where historical data is limited. “AI can help address this challenge by effectively identifying similarities between new and existing products, by leveraging vast amounts of unstructured data, such as product attributes or images,” explains Desmarais.

Speaking of planograms, Cohen has been working in the Bensadoun School store lab with Couche-Tard on optimization of shelving placement. “We all know that items displayed in the middle shelf at eye level sell the most than those displayed at the top or bottom, and so we are trying to quantify the effect by varying the position of different items on different shelves,” he says.

Businessman checking inventory in minimart on touchscreen tablet
AI-guided visits          

By using AI, Cohen says QR codes can be more highly personalized and smart in nature. “By having shoppers scan the code with their phones, stores will have the ability to deliver a promotion at the right price at the right time based on their personal preferences, purchase history and where they are in the store,” he says.

It is the utilization of generative AI and digitalization that makes this possible, adds Desmarais. “This combination can generate value by guiding customers within the store, aiding them in locating products or suggesting complementary items to those already in their basket.” 

Product demand optimization

IVADO Labs has been working with retailers like Couche Tard on using AI “to gain deeper insights into consumer preferences, particularly in understanding how consumers respond when their preferred products are unavailable,” says Desmarais. “This understanding is pivotal in predicting how consumer demand transfers to alternative products, enabling retailers to enhance customer retention and mitigate lost sales. For brick-and-mortar operations, these insights empower retailers to dynamically adjust forecasts for alternative products in the event of stockouts, effectively preparing for the shift in consumer demand.” 

The metaverse

Tech giants like Google, Facebook and Amazon have invested in the so-called metaverse –a 3-D virtual reality that crosses over and enhances physical world capabilities.

One of the most interesting future-forward projects McGill’s Bensadoun School and Couche-Tard have undertaken with the store lab is “to reproduce the digital twin,” says Cohen. “We’ve taken thousands of pictures of the store to reproduce a virtual immersive environment that looks exactly like the store.” In a few years, he imagines customers could through VR goggles “have an immersive digital store experience, even picking up items, flipping them around and placing orders to have the real products delivered to your doorstep.”

This article first appeared in the January | February 2024 Convenience Store News Canada.

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