How the Battle for the Last Mile has Become the War for the Last Block

It’s been said that retail is dead or dying, but the truth is that retail is evolving.

Brick-and-mortar has been forced to update its playbook for a world in which practically anything can be dropped on our doorstep in two days or two hours. But it’s a mistake to dismiss brick-and-mortar as those who cry “retail apocalypse” have done. Indeed, 67% of e-commerce brands have opened physical locations. From Warby Parker to Casper and Harry’s, digital natives are increasingly relying on physical locations to enhance their strategy and get closer to consumers.

This desire for proximity can also be seen in the battle that’s brewing in the so-called “last mile” of the consumer journey. E-commerce has struggled to accommodate immediate consumption and daily needs. Big-box is experimenting with small-format, new delivery services pop up frequently, and even Amazon has thrown its hat into the ring with the recent report that they plan to open 3,000 physical locations by 2021. You might say that the battle for the last mile has transformed into the war for the last block.

According to Uberall, more than 4-in-5 (82%) of U.S. consumers have conducted a “near me” search on their smartphones. Google reports that there has been a 200% increase in the past two years for searches with the terms “near me”, “open”, and “now”.

But one channel has dominated the last block for decades and continues to succeed. We may think of the local corner store when we hear the phrase “convenience retail,” but this poorly-understood fuel and convenience industry drives more than $600 billion in annual sales—making it larger than the whole of e-commerce. In-store sales have experienced record growth for the past fifteen years, reaching $237 billion in 2017. While many retail channels have struggled to increase their store count, convenience retailers have experienced solid growth.

Leading convenience retailers understand the diverse needs of today’s consumers. That’s why they’ve expanded into proprietary foodservice and poured more than $6 billion into store remodels. Simply put, these are not your grandfather’s gas stations. Wawa now sells an estimated 200 million cups of coffee each year. Leading brands such as QuikTrip, Love’s Travel Stops, Pilot Flying J, RaceTrac, and Sheetz are amongst America’s largest private companies.

Every brand wants to reach consumers where they’re at. For many, they’re at the local convenience store. Having a clear strategy for this channel is essential.

One challenge, however, is fragmentation. Although a few national brands exist, many industry leaders are regional. Furthermore, approximately two-thirds of retailers are independently owned and operated.

Another challenge is the fact that today’s consumers expect the physical and digital words to blend together seamlessly. According to Uberall, more than 4-in-5 (82%) of U.S. consumers have conducted a “near me” search on their smartphones. Google reports that there has been a 200% increase in the past two years for searches with the terms “near me”, “open”, and “now”.

So, what can you do?

Be dedicated

Brands need to start by having a dedicated strategy for Fuel and convenience retail. As billions more are invested to dramatically improve this retail consumer experience, savvy brands will win market share by focusing and benefiting from continued growth in this space.

Think nationally and regionally. A successful strategy for the fuel and convenience channel must address both levels. A national-only focus will exclude many of the most successful and popular retailers.

Be bold

Some brands who have traditionally ignored convenience stores may want to consider partnerships. We often see high-tech vending machines in airports that leverage high levels of foot traffic to sell everything from consumer electronics to cosmetics; but convenience retailers also experience similar foot traffic—especially those who sell fuel—and they’re positioned along the daily work commute of 135 million Americans.

And finally, consider a brand-agnostic strategy. Platforms like GasBuddy allow you to approach fuel and convenience as one addressable market.