A future with self-driving cars, also known as autonomous vehicles or “AVs,” seems inevitable. These machines, which leverage advanced cameras, computer vision, and sensors, in place of human inputs to steer automobiles automatically, are poised to change how we travel, where we live, and how we shop.
It feels like every day a new headline announces another leap forward into the autonomous driving future. In the past 18 months alone, companies have rolled out pilots for self-driving cars in San Francisco, Las Vegas, Pittsburgh, and other major metropolitan areas.
However, there are conflicting perspectives on how soon we can expect a self-driving revolution. In a recent interview, Eddie Alterman, editor-in-chief of Car and Driver argues, “If you want to have the kind of safety that’s necessary for people to give up the wheel and to trust the machine, I believe that driverless cars will have to exist in a domained environment, at least for a very very long time.”
Investors, nonetheless, are already convinced that self-driving cars represent a huge and untapped market, especially in the retail space. The effects of self-driving cars in the world of brick-and-mortar could be most profoundly felt by convenience retailers, the majority of whose customers are drivers who want to stock up while they fuel up.
So how will self-driving cars affect the c-store industry? Here’s an overview of some possible outcomes for convenience retail, and how c-store operators can prepare for an autonomous future.
More Competition to Meet Shoppers’ Off-Hours Needs
Some argue that delivery in retail is quickly becoming the ultimate convenience. Innovative startups are cropping up around that philosophy and investors are taking notice.
In fact, a recent WSJ report announced massive investments by the $100 billion Softbank Vision fund into Nuro, a startup that deploys autonomous vehicles to deliver products directly from retailers to shoppers. Nuro’s technology isn’t just a precursor to our not-so-distant future—Nuro is now live and delivering products to Phoenix-area Kroger and Fry’s Electronics customers for a reasonable $4.95 fee. Kroger isn’t the only food retailer already using this type of technology. Supermarket News recently announced that several Boston-area Stop & Shop stores are partnering with startup Robomart to send unescorted AVs filled with produce and perishables straight to shoppers’ homes. Users can summon these self-driving cars and pay for their purchases automatically via an app.
Overseas advances in automated delivery are even more dramatic. In Shanghai, upstart company Moby has developed a prototype of their 24-hour c-store on wheels, further pushing the envelope on innovation in retail. Customers don’t have to place an order in advance, but can, according to Fast Company, hail the AV via mobile app. When Moby arrives, customers enter the small, transparent cube, shop from an assortment of limited selection, everyday needs, and just walk out (ala Amazon Go). Moby boasts that store operators can cut significant rent and real estate costs, while reaching consumers in rural and far flung areas who can enjoy now shop without the burden of traveling to a store.
The rise in autonomous delivery means that customers will increasingly be able to access the products they need whenever they need them, even outside of traditional delivery hours. Convenience retailers have long capitalized on shoppers’ off-hours needs, with NACS reporting that 90% of c-stores are open 24-hours and that they cater their assortments to rise to the needs of late-night shoppers.
It will be interesting to see how AVs impact competition for the early morning and late-night dayparts, which have been a stronghold for conveniences retailers. It may very well be that running out to the c-store at 2AM, or popping in for a hot breakfast on one’s way to work is half the fun for shoppers. And, it remains to be seen whether traditional convenience retailers will begin to capitalize on AV technology to cut costs and access a wider range of shoppers in the way that Moby implies.
C-Stores in Unconventional Places
Nuro isn’t the only innovator infringing on the $601 billion US convenience market. Rideshare services such as Lyft and Uber are the fastest growing transportation companies in the US. But these platforms are now diversifying their revenue beyond travel and creating new sales and distribution channels for consumer packaged goods.
Companies like Cargo have emerged to provide passengers with traditional c-store products such as snack bars, gum, and cold drinks; all available for purchase on-the-go while in the vehicle. As rideshare services eventually transition to fully autonomous vehicles, it’s easy to imagine a future where shoppers don’t even need to step out of the vehicle in order to grab a cold can of Monster energy drink. And, with the driver out of the picture, there’ll be even more space to stock salty snacks and candy.
For many convenience shoppers, the store is not the destination. Success in convenience relies on a retailers ability to be a quick-stop on the way to wherever their customers are going. As ride sharing becomes ever more popular, it may become easier and easier to turn cars themselves into c-stores, removing the quick-stop from the equation.
Less Foot Traffic
Autonomous trucks (ATs) will be among the initial widespread applications of autonomous driving technology. Interstate trucking offers automation technology more predictable traffic flows, less exposure to dense urban road risks, and the opportunity for rapid wide-scale shipping savings.
Many new companies, such as Kodiak, are chasing the autonomous trucks opportunity, convinced that they’ll transform the US logistics market. A recent McKinsey report predicts four total waves of gradually decreasing driver participation with full autonomy expected to begin by 2027.
C-stores attached to gas stations that rely heavily on long-distance truckers may eventually see these shoppers replaced by driverless trucks. ATs may need gas, but won’t venture past the pump to shop in-store. Fewer truck drivers could mean fewer convenience purchases, especially for stores located inside of gas stations and on major highways.
The Bigger Picture for Convenience Retailers
As a c-store operator, it’s important to remember that the while AVs may significantly alter customer behavior and demand, the time horizon to a fully driverless society is unclear. In a recent New York Times article, noted transportation lecturer Reilly Brennan speculated that fully unstructured driving by “go-anywhere” AVs is a long while away and that “few startups actually understood the commitment required to create a complete vehicle.”
This leaves c-store owners with ample time to consider how to adapt to new economic models and deploy innovations to help them adapt. The rise of the technology could eventually mean a dip in foot traffic or an increase in competition. This, of course, depends on how much you rely on certain shoppers (read: truckers) or how reliant you are on off-hour shoppers, as well as a range of other factors.
The rise of self-driving cars also provides a great opportunity to convenience retailers. If you grew up in the convenience arena or have worked in it long, you may just have an edge on the new players in the field. After all, traditional convenience retailers have already stayed competitive in the face of pharmacy and grocery retailers growing increasingly more convenient.
If you can continue to innovate in ways to suit your shoppers (i.e. bring the convenience store to them), then you’ll be poised to stay competitive. But this isn’t by any means a necessity. It is, however, critical to employ in-store technology to ensure that your stores are meeting shoppers’ expectations every time they come through your doors. This could mean a workforce management tool to make sure your store is adequately staffed, a tech-savvy loyalty program for personalized promotions, or a data analytics tool to gain a deeper understanding of each store’s local demand patterns.
Retail execution tool CB4 ensures store personnel know when key products are underselling, out of stock, or unavailable to customers at key points of purchase at every store in your chain. Ensuring that customers have access to the products they need is table stakes for building a quality in-store experience. And while convenience is crucial to many on-the-go consumers, the in-store experience still matters and will continue to help c-stores differentiate themselves from automated disruption.