Can convenience stores escape pain at the pump and drive store margins?

Jennifer Ortner
Vice President - Gas, Grocery & Convenience
Jen has decades of experience working with some of the world's largest brands to build and redefine businesses across CPG, Retail and Digital Media & Promotions.

When it comes to oil, it’s the best and worst of times—depending on who you ask. In June, gas prices hit an all-time high, with the national average at $5.005. Meanwhile, 19 states exceeded that average, the highest of which was California at a whopping $6.40. That’s great news for oil producers. Shell, for example, made $9.1B in profit in 1Q22, with Exxcon close behind at $8.8B (Guardian).

But for retailers, rising oil prices are more nightmare than fantasy. In order to stay competitive as the numbers climb, convenience stores typically swallow some of the cost so that it doesn’t all get passed on to customers. And they don’t do it just to compete with other gas stations. Since most of the margin comes from in-store purchases, convenience stores need people to both stop for gas and pop in for snacks.

Profitable items include packaged meals, cigarettes and beverages. Some rely on complementary services like a car wash for the bulk of their profit. But thanks to inflation, consumers are becoming more selective with their discretionary spending. According to Morning Consult, consumers are beginning to seek cheaper alternatives on everyday essentials like gas and groceries in response to inflation rates. All of this compounds the in-store shopping challenge for convenience stores.

Loyalty programs offer a potential solution

Some convenience stores are turning to loyalty programs to take advantage of the savings they can offer in multiple food and beverage categories, as well as fuel and other retail sales. These programs also help convenience stores compete for market share against restaurants and grocers. Seven & I Holdings, parent company of 7 Eleven, for example, plans to use its new rewards app, 7Rewards, to drive profit margin growth. App users can earn points redeemable for store credit, take advantage of fuel discounts and get other exclusive deals.

Cumberland Farms, via parent company EG Group, uses a loyalty program called SmartPay Rewards. The program gives members access to cheaper gas, faster checkout, fuel rewards, “BOGO” deals and more. With the faster checkout perk, SmartPay Rewards moves beyond discounts to entice in-store shoppers with added convenience. The strategy appears to be working: the company announced they had sold $4B in fuel and saved customers almost $200M on gas since the program’s 2013 launch.

Extend personalized offers to all customers

Loyalty programs have the advantage of creating a direct, privacy-safe connection between brands and customers. Convenience stores have a channel to incentivize visits and offer in-store discounts. At the same time, they’re collecting first-party data to create more personalized messages and offers.

But why limit yourself to the loyalty audience when penetration for successful programs usually doesn’t exceed 35%? Plus, when it comes to targeted marketing, Rewards participants represent a fairly active shopper, so the average customer’s habits won’t be reflected in your loyalty data.

For a more comprehensive approach to driving store margins, you need to understand – and reach – your entire audience. With actionable insights on all in-store shopping behaviors, and a mechanism to identify and reach the individuals behind the purchases, you can begin to entice more shoppers to come in and snag those profitable items.

Visibility into SKU-level purchase histories and seasonality can also help you determine both the structure and timing of personalized offers. As a bonus, these same insights can help you make other operational improvements, such as store layout (making best-selling items more prominent, for example.)

Start with POS transaction data 

But how do you get these types of insights? Many brick-and-mortar operations, including convenience stores, don’t know who’s visiting their stores, don’t have insight into their purchase behavior, and can’t target these individuals.

Every store, however, collects POS data from card transactions. By leveraging abbreviated card information in tandem with bank transaction data and proprietary census of offline identity and behavior, you can begin to identify the individual behind the credit/debit transaction and understand all of your customers on a more granular level. 

Credit/debit cards can also become loyalty cards. As you track shopper activity, reward targeted purchasing behaviors automatically without ever having to ask anyone to sign up or track points. You can skip the CapEx of designing, building and maintaining an app—and head straight for the valuable data.

Reach your customers with Bridg

We can help you build unified, privacy-safe profiles of loyalty and non-loyalty customers with SKU-level purchase history and hundreds of enriching demographics, socioeconomic and lifestyle attributes that power analytics and targeted marketing.

Contact us to learn more about how we can help you drive greater profit margins using targeted insights on in-store customers.