- March 16th, 2017
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Wal-Mart Convenience: What’s In Store
What lasts about three minutes, wakes you up and gives you gas? Lately, it’s a visit to a convenience store. But if Wal-Mart’s recent forays into the format are any indication, this soon may change.
Wal-Mart is testing several convenience store–type concepts, the most recent stores opening in Texas and Arkansas. Other concepts include an online pickup store and a to-go format, launched a few years ago, that features prepared foods.
With each iteration, it appears Wal-Mart is repackaging just what a convenience store should be to modern consumers. That is to say, it is transitioning from a gas station shop packed with cold drinks, snack cakes and hot dogs to a destination for prepared meals, pre-ordered household items and, yes, gas.
Retail analysts might point out that Wal-Mart is simply following the lead of key emerging trends, particularly those supporting the public’s desire for more healthy foods. But the mere size and purchasing power of the chain among consumers and vendors dictates that what it chooses to do will in turn influence the entire convenience store industry.
Let’s look at where its path has led so far.
Long the hub for fuel, fountain drinks and road food, convenience stores have proven adept at morphing to meet the rapidly moving lifestyles of consumers.
The first convenience store, an earlier iteration of what is now 7-Eleven, was founded in 1927. Convenience stores essentially replaced the general store, and are now increasingly serving the role of grocery chains. As described by the NACS (The Association for Convenience and Fuel Retailing) convenience stores evolved from “gas stations that happen to sell food to food retailers that happen to sell gas.”
Among key statistics:
- U.S. convenience store foodservice represents a roughly $61 billion industry, according to the NACS. For context, Kroger Co., the nation’s largest traditional supermarket chain (and also a convenience store operator), generated total 2015 sales of nearly $110 billion.
- The industry reached a record 154,535 stores in 2016, a 340 store increase (0.2%) over 2016.
- Convenience stores account for 80% of all the fuel purchased in the United States — 124,374 convenience store locations include pumps.
- The stores are getting bigger. The average urban convenience store is 4,594 square feet, while the average rural location covers 4,938 square feet.
- Despite size, the average visit to a convenience store is three to four minutes.
Wal-Mart’s latest c-store concepts are described in the Dallas Morning News as “tweaks” more than reinventions, but taking into account the size of the industry and Wal-Mart, which posted a 2016 revenue of $486 billion, a tweak can ripple into considerable change. Consider that Wal-Mart’s roughly 11,700 global locations attract 260 million customers per week.
The two test stores it opened in January include a lot of the staples you’d expect in a convenience store, right down to the ICEE machine and roller grill. The stores also include a hot section of prepared foods, including pizza by the slice, a six-tap coffee bar and a selection of fruits, yogurts and Marketside-branded salads and wraps. Both the Texas and Arkansas stores operate in the parking lots of Walmart Supercenters.
Additionally, Wal-Mart is testing convenience stores for online order pickups. Its most recent location, in Colorado, includes a fuel station and drive-through where customers can pick up those grocery orders, as well as the standard c-store fare. The 4,000-square-foot location opened in December, about a year after Wal-Mart opened a similar store in Alabama.
“We’re eager for feedback from customers. We want to know what’s working,” Wal-Mart spokeswoman Anne Hatfield told the Dallas Morning News.
A third concept—and Wal-Mart’s first run at the convenience store format—Walmart Grocery (formerly called Walmart To Go) opened in 2014. The store, in Arkansas, offers hot foods, including rotisserie chicken, as well as online order pickup. Wal-Mart has not announced plans to open additional locations.
What lies ahead for Wal-Mart’s convenience store exploration will be determined by the prevailing needs of today’s on-the-go consumer. This may range from pet-watering stations to prepared meal kits to tech counters for unexpected smartphone needs.
Whatever the outcome of Wal-Mart’s convenience endeavors, it is correct to pursue them. As pointed out in recent research by industry consultant WSL Strategic Retail, one of the key trends the retail industry is exploring to maintain consumer interest is new formats, including smaller, local stores. But to succeed, retailers ultimately have to deliver happiness.
These hard truths may be inconvenient to some retailers, but like the need for fuel, food and a morning cup of coffee, they are hard to ignore.