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The CPG Guys
Convenience Channel Retail Media with NexChapter's Art Sebastian and Bridg's Jared Luskin & Neil Murphy
00:33:00
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- [00:01]
Peter Vs. Bond
Hey, it's PVSB with the CPG guys. Sri and I are going to be in Las Vegas, Nevada January 6th through the 9th for the 2025 CES conference. Monday evening we'll be hosting an invite only party at the Aria. On Wednesday morning we'll be emceeing a breakfast briefing on 2025 Retail media investments that's sponsored by CVS Media Exchange. That's over at the Park MGM Tuesday appearing over at the OMG Commerce Experience at the Cosmopolitan and we'll be seen mostly around the area space. Expect to see us going into a lot of the area sky suites for individual meetings. We'll even be recording some content there. If you see us, stop by, say hello, take a selfie, whatever you want. We love speaking with people. We look forward to seeing you in January. Happy Holidays everyone.
- [01:04]
Art Sebastian
Hi, I'm Art from Next Chapter.
- [01:06]
Jared Luskin
Hi everyone, I'm Jared Luskin from Bridge.
- [01:08]
Neil Murphy
And I'm Neil Murphy from Bridge and you're listening to the CPG Guys.
- [01:15]
Peter Vs. Bond
Welcome to the CPG Guys Podcast. Your hosts Sriraja Gopalan and Peter Vs. Bond explore how brands and retailers engage consumers in an increasingly digitally driven world. And now, here are the CPG Guys. Hello and welcome to the CPG Guys Podcast. I'm your co host pbsb and when I'm not talking into a podcast microphone, I serve as Partnership Acceleration Lead at Flywheel, a division of Omnicom. My co host Sri, who's also the Chief Revenue Officer at Think Blue, is unavailable for today's episode, but please do follow his incredibly talented daughters Ria and Lara in their explosive music careers. And of course his wife Kavita has her own podcast, Lights Camera Conversation. More about that later. The CPG Guys is part of a notable collection of podcasts which includes CPG Scoop and the FMCG Guys. Please make sure to follow each of our podcasts in your favorite app, Apple Spotify. Whatever you use, that'll ensure you're automatically notified of new episodes. I also want to mention that this year we're partnering with drugstore news on December 4th at the iconic Lincoln center on the annual Issue Summit in its 21st edition will be co presenting eight awards at the event in the health and beauty care space to both brands and retailers. We're also partnering with Path to Purchase Institute on its annual Omni Shopper Award Chicago November 14th at Path to Purchase Live with a select group of winners will be featured on our podcast. To be part of the program or sponsored, get in touch with us@contactpg guys.com links to all of the Raj family social media accounts. There are lots of them, including their three cats. I'm not going to go into that here, but the DSN, P2PI and Cornell events, plus the podcast collective sites are all available in the digital liner notes of this episode. You don't have to write anything down, just toggle over and click the hyperlink. So let's get to our guests and why we're here today. You know, not long ago, convenience stores were an afterthought, primarily used only for small infrequent purchases. Gradually though, consumer behavior shifted in the other direction with more preference for convenience and value over large grocery stock up trips. This has resulted in an industry shift as larger markets like Amazon, Whole Foods and Walmart have evolved to meet their consumer demand. With the creation of new convenience formats such as Amazon Go and Walmart Neighborhood Market, consumers increasingly see convenience stores as a viable option for food over traditional fast food restaurants. Yet the Convenience channel has not seen the kind of explosive growth in retail media platforms the way that other channels have. Here to speak to us about the convenience channel and its appropriate role in the evolving retail media ecosystem, we welcome back our friends from Bridge who are partnering with us on this episode. Rejoining for his third appearance, you're two away from the jacket, Neil. Just two away is Neil Murphy, Chief Revenue Officer at Bridge. And joining him is Jared Luskin, Head of Partnerships at Bridge and another returning guest, Sarge Sebastian, a past guest of the podcast who's now CEO of Next Chapter. Neil Jared, Art, welcome to the CPT guys.
- [04:27]
Neil Murphy
Thanks Peter. Thanks for having us.
- [04:29]
Peter Vs. Bond
Yeah, absolutely. Before we get to our questions, Jared, let me turn to you. Can I ask you to remind our audience about what Bridge does?
- [04:36]
Jared Luskin
Yeah, absolutely. I'm looking forward to getting my jacket in the not too distant future. Peter. So Bridge really is an identity resolution platform, all rooted in point of sale transaction data. So we work with retailers to identify, understand and engage their in store shoppers whether or not they're part of the retailers loyalty program. So that identity resolution really enables three major use cases. One, insights and analytics about those retailer shoppers. Two, media activation and importantly measurement of those campaigns. And then three, really the combination of those first two, which is to help fuel the growth of retail media networks. And based on that core identity resolution technology, we last year launched Ripple, which is a coalition of regional grocers and convenience stores that now matches the scale of some of the biggest RMNs out there. So today Ripple has, we're proud to say, product level purchase data from more than 70 million shoppers. And we expect that to grow to over 100 million in Q4 of this year.
- [05:44]
Peter Vs. Bond
Wow, that's terrific. Thanks, Jared. Let me turn to my friend Art. Art, you and I have known each other for, wow, a long time. Like 20 years, but hard to believe it. But you're back on the podcast. Last time we spoke, you were on the retail side. And since then you've established next chapter. Would you let us know about your new business?
- [06:00]
Art Sebastian
Yeah, yeah, Peter, thanks. It's, it's great to be here with you again. And I'm. I will note that I'm three episodes away from my very own jacket as well. Look, I started my career in grocery retailing at the age of 15, and so it's hard to say, but I've spent over 25 years in grocery CPG and most recently convenience. I spent five years with Casey's, leading the digital transformation and omnichannel marketing. And I launched, I had the opportunity to launch their retail media network called Casey's Access. So anyway, after a long career in retailing, I saw that my next opportunity was to take all of that learning and help others. And so earlier this year, I launched Next Chapter Nex Chapter one Word, and it really is an advisory firm focused on the convenience and grocery industry. Today we have the pleasure of serving retailers, brands and technology companies. The work we do ranges from digital transformation to omnichannel marketing, loyalty, and of course, my favorite topic, retail media networks.
- [07:09]
Peter Vs. Bond
Brilliant, Art. I really appreciate that. And I think the services you offer are desperately needed in this transformational ecosystem that we're now finding ourselves in. In the digital liner notes of this episode for our audience, we're going to include links to all three of your LinkedIn profiles, your company's LinkedIn pages, and of course, your corporate websites for our audience to explore and multitask as we begin our conversation today. So to our audience, go over to the liner notes, click the link so you can learn more about our guests. So let's get to the questions. I'm going to start with you, Art, actually. How's the consumer perception of convenience stores changed or shifted over time, particularly, you know, the last decade or so? And what factors have contributed to their growing popularity as an outlet for commerce?
- [07:57]
Art Sebastian
As you mentioned earlier, convenience was somewhat of an afterthought. It wasn't really a modern retail experience, and a lot has happened in the last decade. A couple things I'd note, one is there's over 150,000 convenience stores across the US so there are a Whole lot of sites spread out throughout the US there's high density. There are certain markets where you've got 15 or 16 convenience stores to one grocery store. So you have a real high density. And by the nature of the goods sold at a convenience store, you tend to have very high purchase frequency. We've seen three to five times a week, which is very different than the once a week stock up trip in the grocery industry recently. And I will say that some of this was driven by the pandemic. But even before that, there's been a surge in investment in digital capabilities. A couple things, right? Earlier in the last sort of 10 years or so, there was an investment in point of sale and ERP systems. But if you fast forward to just even the last five years, we've seen an increase in investment in loyalty programs. As a matter of fact, 63% of the top 200 chains have launched a loyalty program. And because of that, convenience retailers are launching mobile apps, they're launching ordering experiences, putting in more sophisticated Martech and ad tech capabilities. And the last thing I just want to touch on, Peter, that has really sort of shifted this channel to a much more contemporary channel with consumers is there's been a lot of investment in the food service category. And that investment has come to life in terms of quality of food, the talent that this channel has hired from the restaurant channel, even how food shows up, both made to order food and made to inventory. And that's really beginning to resonate with consumers.
- [09:58]
Peter Vs. Bond
I couldn't agree more, Art. I just came back from a trip to Tokyo and boy, if that's the future, it's looking very promising because the proliferation of convenience stores there is well known. What amazes me is just how much food service has become a prominent part of that channel there. And I see it developing here. So thank you for those thoughts, Jared. As we start to think about this channel in terms of building a meaningful data asset to fuel the ability to create and measure audiences for use in retail media, what do you see as being some of the primary challenges of the players right now in the C Store channel?
- [10:39]
Jared Luskin
Yeah, I mean, I think we see a few primary challenges. You know, if you think about retail media relative to the convenience retail channel, it is a very new opportunity, really. Just, you know, over the past year, year and a half, we've seen entrants like Casey's to Arts,.7, 11, Wawa, et cetera. But some of the challenges we see are first and foremost, first party data scale. Right. So whether you're a regional chain or an independent, especially those C store retailers, they just don't have the sufficient scale primarily because of low. Even though loyalty is a newer thing in the channel, there's relatively low loyalty penetration and don't really have the scale to warrant the investment. From a retail media, from a CPG brand perspective that is coupled I think with speed to market, right? You think about the investment required to roll out a new retail media offering, right? Whether you're building it internally, whether you are partnering with different components for your tech stack, there's a pretty significant investment involved there and that impacts your speed to market, right. You can't really get it out quickly, right. We look at chains as potentially being a year, two years out from really being able to launch kind of a full scale solution. And when you think about that from an investment perspective on the advertiser side, there are very few chains that meet kind of the two big requirements or maybe three big requirements, I would say. One is that scale, right? You need tens of millions of shoppers to make it effective for an efficient for a CPG to invest to that national audience distribution. Right. If you think about some of the more regional players, you can't necessarily hit every region of the country. And then three, and I think this is a big one that we see obviously in media across the board, retail media or otherwise, is the measurement capabilities being able to prove that when a CPG invests a dollar in a retail media network that they're getting X dollars in incremental return. So those are the big things that we see as some of the challenges that the chains face today.
- [12:57]
Peter Vs. Bond
I don't think you can overstate the importance of reach, particularly to try and acquire some of the brand investments that have been going for years to more traditional mechanisms like print media and linear television. You have to have the reach, but you're not going to facilitate the shift to that tool unless you have the performance measurement on the back end. So I think you've really called that out very well. So. So Art, I want to go back to you. We see that the typical focused convenience store shopper is in and out in under what, about four minutes. Can you elaborate on some of their key characteristics and behaviors and how convenience channel can capitalize on their unique position to better serve the communities they're in?
- [13:40]
Art Sebastian
Sure, absolutely. And the first thing I'd say, Peter, is that the convenience channel consumer is literally everyone. It literally is everyone across the US and an interesting stat is that the convenience store channel serves 160 million customers daily. That's nearly half the US population and there are 40 million fuel fill ups on the forecourt a day. And so there's certainly a lot of activity at convenience stores. And when you think about the range of customers, convenience stores see everyone from construction workers to teachers on their way into school to business people. And now recently we've seen a spike in a younger consumer. And this younger consumer is really interesting because they're more likely to shop a convenience store. They're twice as likely to build larger baskets. Some research Studies have shown 10 or more items. They're the consumers that are responding well to the food service enhancements. And in a recent survey done, almost half of these younger consumers have said they've tried delivery from a convenience store. Some of the categories are really unique to this channel. I'll just name a few. Tobacco. Tobacco is a really big category. It's a big part of convenience. Lottery, another really big category. But the data shows that when a consumer comes in to buy tobacco or lottery, there's a high likelihood they're picking up an energy drink, a cup of coffee, a snack or packed beverage. And this just adds to the transaction, which then adds to the data. And then finally, one last point Peter, I'd like to make is that convenience stores have this really unique opportunity to serve rural America. And you know, in my experience at Casey's, more than half of the stores were in towns of 5,000 or less. And in some of those towns, the convenience store is the gas station, it's sort of the mini grocery store and it's also the restaurant and meeting place. So it plays a really unique role for us here in the country.
- [15:55]
Peter Vs. Bond
Thanks, Art. I absolutely agree with you. The fact that these stores are the oftentimes the primary mechanism to get the staple products for households to live, particularly certain times of day. I mean, they offer also probably one of the greatest opportunities for day part strategy in terms of merchandising. I'm sure we'll probably get into that later, but let me bring Neil into the conversation. Neil, welcome back to the podcast. So how are these stores leveraging loyalty programs and personalized programs today, particularly when they have fuel customers? And can you speak to how these reward programs really leverage the data that they can collect on purchasing behavior to consistently and accurately identify needs and preferences that allow brands to, you know, refine their marketing campaigns and advertise the products based upon what people are otherwise buying in these stores?
- [16:51]
Neil Murphy
Yeah, sure, Peter. I mean, loyalty programs are designed to do just that, right? Drive loyalty. But as Jared mentioned before, there's only about 35% of consumers belong to a fuel or C store loyalty program. When C store retailers provide customers with more personalized promotions, they see a significant increase, upwards of 60% increase in pump to store conversion. And why is that important? Margins are much higher on the products they sell in store over the gas. They just are. So from a retailer perspective, it is much more profitable. There's a much more profitable sale and they're trying to drive that loyalty at the pump to get customers into the store. From a CPG perspective, you're able to identify and target customers with personalized messages, right? There's an opportunity to leverage that loyalty program to communicate your message. However, as I pointed out, the loyalty penetration in C stores is typically much lower than in other similar categories like grocery. So given that, it's really tough to drive incremental trips across your entire customer base with without a loyalty program. So imagine today if you could identify 60 or say 70% versus the 35% that are in your loyalty program. Imagine if you can identify more of those customers regardless of if they're in a loyalty program and the impact that you can have with that C store driving. Obviously higher sales and higher margin. And I think that's the area that Bridge can really help with by identifying both the loyalty and non loyalty shoppers as we help these retailers drive more loyalty as well as retail media engagement.
- [18:36]
Peter Vs. Bond
Thank you, Neil. Before we continue with the conversation, I want to tell our audience that the CPG guys will be partnering with Cornell University to launch an executive education program on retail media strategy for brands and retailers taking place in May of 2025. Audience management, JBP planning, budget planning optimization, executive strategy. We'll have it all meet some of the most important retail media network leaders in the space and grow together. Links to the program site may be found in the digital liner notes. And also let me remind our audience that today we're speaking with Neil Murphy and Jared Luskin from Bridge along with Art Sebastian from Next Chapter. So Jared, I want to go back to you. What are the biggest areas of opportunity for brand advertisers to engage convenience shoppers in a measurable way? And how do you see bridges ripple helping them to really enable this opportunity? Whereas before this hasn't been an option for most brand advertisers?
- [19:33]
Jared Luskin
Yeah, sure. Like we talked about a little bit before, I think that today there just are not a lot of opportunities for brand advertisers to get their message in front of this really high frequency audience. Right. Art talked about three to five trips A week. Those are three to five opportunities to get your message in front of that shopper and ideally change their buying behavior. So Ripple, again, is an aggregation of regional grocers and convenience stores. And from a convenience store perspective, actually, interestingly, we have over 42,000 sites today of the 150,000 in the US that art had mentioned. And that number continues to grow. And again, this is a really kind of hard to reach audience given that there aren't a lot of options out there. And we offer the opportunity for advertisers to reach that audience based on a number of different kind of targeting factors. Right. What people are buying, when they are shopping, where they are shopping, also demographic lifestyle indicators as well. And importantly, again, as we mentioned before, we've got the ability to really measure sort of down to the penny the impact that those campaigns are having against that audience. We offer syndicated audiences on all the major platforms out there. We have custom audiences that we can build. We have a managed service or white glove service. And we also license data more for the larger enterprises that have data, science teams, etc. But again, I think the big thing from our perspective is this is a really unique, kind of hard to reach audience that Ripple is enabling those advertisers to really get their messages in front of outside of some of the big, you know, kind of grocery focused retail hours today.
- [21:18]
Peter Vs. Bond
Thank you, Jared. All right, so I want to kind of get a sense from all of you is, you know, the Wayne Gretzky question, which I always love to ask, which is where's the puck going? Like, what are some of the major trends that our audience should pay attention to that are going to change, really shape the future of convenience retail. Let me start with you, Art, because I know you're probably champing at the bet with a bunch of things that are, that are right on your radar right now.
- [21:44]
Art Sebastian
Yeah, Peter, I think they're are going to be continued investment in technology in this channel. We've seen a lot of investment in things like self checkout. We've seen even retailers investing in infrastructure to be able to service customers better and run stores. Things like edge computing, some of the food service growth I mentioned earlier that's enabled by kitchen technology like production planning systems and label makers and all that type of stuff. So there's just a lot happening within the kitchen convenience retail space. I think that the area that I get most excited about, and I know Neil and Jared share this, is sort of the customer facing investments that convenience retailers are making. And while they've all put loyalty programs in place and, you know, they're figuring out how to fine tune those programs to drive the best business outcomes. I think ultimately what it leads to is an increase in data. And so I'm even seeing convenience retailers start to invest in things like customer data platforms to unify that data. And so that's really interesting. That all said, there remains this huge opportunity to identify the, what I call the known unknowns. And these folks are known because they're in our stores every day, but they're unknown because we don't have any data on them. So this is a tremendous opportunity. And it is so because it helps convenience retailers increase their scale. And when you increase scale, you can improve your marketing activation. Things like email and sms, you can improve your paid media strategy. And I think what we've all been talking about is you can really get in the game in a much bigger way in the retail media space. So I think the customer facing technology, and if I were just to, just to toss out one more thing, just really, because I can't help myself, Peter, is I think there'll be a lot of investment in technology on the actual physical site. And so we'll continue to see investments at the fuel pump and the screens to bring media and relevant ads to the screens. We know consumers are standing there for 90 seconds to 120 seconds and we have their attention. And then when they walk in the store, they're going to see a plethora of digital signs and digital menu boards that enable retailers, and quite frankly, brand advertisers to get the right messages in front of consumers at the point of purchase.
- [24:22]
Peter Vs. Bond
Thank you, Art. Some very thoughtful comments there. Jared, let me go to you next. Building upon what Art said, what are some of the innovations, the trends that you're focused on, and particularly thinking about that issue of building the scale, identifying those consumers, and ensuring you have more data points that make it easier for brands to target the right shopper for what they're doing. What are your thoughts and where are you looking?
- [24:47]
Jared Luskin
I mean, I would agree wholeheartedly with everything that Art said. I mean, I think if you look at the convenience channel, right, it is those investments in technology, whether they are the customer, the shopper experience or sort of data capture or the screens, et cetera, like we're gonna, I think we're just gonna see those explode over the coming years. I think what's really interesting, the other thing that's really interesting is, and I can't remember if Art, or if Peter mentioned it earlier, is the shift, the general shift in the C store channel away from just, you know, the quick stop, the buy some snacks, buy a beverage now, more, you know, food service offerings, et cetera. I mean there was a survey recently that I think percent of executives said that they were going to be investing in health and beauty and wellness. Right. So bringing more offerings to those shoppers to be able to kind of capture more of their share of wallet against these different categories that maybe historically they haven't competed in. And I think, Peter, to your question, that is all going to play into this sort of this retail media game right now. It's not just going to be these chains being able to look at purchase data within salty snacks and beverages and things like that, but food service competing with restaurants, competing more with grocery stores around some of those stock up trips, competing with a pharmacy or a drugstore in terms of some of those health and beauty and wellness offerings. I'm really excited to see where that goes in terms of those stores are expanding that consumer experience and therefore expanding their opportunity to work with brand partners on the, on the back end.
- [26:32]
Peter Vs. Bond
Yeah, I couldn't. I absolutely agree with you, Jared. I remember doing some research during my time at Dunhumby for a national convenience store channel. And at that point most of the attitudinal feedback from shoppers around food service was why would I ever get anything that was fresh from a convenience store? And I think if you go into convenience stores today, that particular glass ceiling has been shattered. I am so incredibly impressed with the level of fresh and food service. In fact, some of the, some of the chains I see, particularly in the, you know, the Northeast, heading towards the Midwest, they pride themselves on their food service. You know, Art talked a lot about what he did at Casey's and he, and I know that because I used to send him pictures of me getting a breakfast pizza at Casey's first thing in the morning when I was in northwest Arkansas. So hey Neil, let's have you round this out. What are your thoughts? What are the trends and innovations you're really focused on? You think is going to make Convenience Channel in particular a great place for brand advertisers to build audiences and communicate? Yeah.
- [27:42]
Neil Murphy
First off, Peter, I was not aware of this. I'm sure Art, and I'm sure you were, but convenience stores represented almost $860 billion in sales in 23. I mean that's ridiculous. And almost about 325 million of that was. 325 billion, sorry, with a B was happening with in store purchases. So this is a huge opportunity and growing at 5% a year, which just shows the pure scale that these convenience stores have. We're currently seeing two primary factors driving change in the C store market. First is the overall shift in customer behavior and we've kind of talked to that quite a bit during this episode. The second is the explosive growth of E commerce and specifically app over the past several years. The desire for low friction, no contact, connected customer experiences as well as competition from same day home delivery services are changing service models and increasing the number of digital touch points. 37% of consumers consider a consistent and seamless cross channel customer experience an essential factor in their purchase decisions according to IDC's Global Retail Operating Model Survey. So according to that and according to the state of the industry for convenience, convenience stores are diving headfirst into ultra speedy deliveries. You know, just an example of that. 17% of these stores already offer instant delivery, quick commerce in 30 minutes or less. So the ability to from your from your home, from your app, be able to order a large Coke and some Doritos and have that delivered to your to your house in less than 30 minutes. That has a lot of appeal to customers today.
- [29:38]
Peter Vs. Bond
I'll tell you Neil, if they weren't waiting until December to release it, I'd be on my immediate delivery app to get the new MM's peanut butter and jelly product that they've introduced. I'm like crave like I've gone to four stores until I couldn't find it. I finally went and read the actual press release in December. How can you announce something now and expect me to wait? I need my M&Ms. Now. Anyhow, I want to thank our audience for always participating in this great conversation, this ongoing community that we've established. Make sure to Visit us@CPTGuys.com where you can find all of our content. We offer you the ability to search it by topic, retail, media, convenience, personalization, loyalty, whatever it is. You can find the episodes that are right for you. And if you think you have some thought leadership to contribute to this community we've created, make sure to drop us an email@contact guys.com and maybe you can join us on this podcast. And don't forget, leave us a rating on your favorite podcast app and make sure to follow us there. That way you see when the newest episodes are released. And of course to our almost 34,000 followers on LinkedIn. So incredibly honored that you choose us as a vehicle for education and entertainment. We really appreciate that and that's our mission here. So Jeff Gentlemen, Jared, Neil, Art, thank you for tackling a topic that we don't often get to talk about on the CPG Guys. We tend to be much more large format focused and I think Art really started us off by quoting some really impressive numbers in terms of the reach and frequency of convenience store shoppers. That makes this a very appealing audience. And then of course, Jared and Neil kind of backing that up with new mechanisms to actually reach them. So, gentlemen, thank you all for joining us today. Really do appreciate it. All right, to our audience, thank you again and we are so happy to be able to talk with you. We're at a lot of conferences over the next couple of weeks, be it grocery shop, unboxed, we're, we've got Path to Purchase live, we've got the Issue Summit. It's pretty hard not to find us somewhere and you may run into us in an airport. If you do and you see us in our swag, just come on over and say hi. We don't bite. Well, not. Not often. But no, seriously, we love to meet our people in the our fans and our community in the wild. So if you see us, come on over and chat. We want to hear from you. We particularly want to hear about what topics you want to hear, because today was one that I think you'll find very interesting. But we look forward to speaking with you very soon on the next episode of the CPG Guys podcast. Goodbye. The content in this podcast episode is provided for general informational purposes only. By listening to our episode, you understand that no information contained in this episode should be construed as advice from CPT Guys llc where the individual author, hosts or guests, nor is it intended to be a substitute for research on any subject matter. Reference to any specific product or entity does not constitute an endorsement or recommendation by CPGuys LLC. The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. The views expressed by CPT Guys LLC do not represent the views of their employers or the entity they represent. CPT Guys LLC expressly disclaims any and all liability or responsibility for any direct, indirect, incidental, special, consequential, or other damages arising out of any individual's use of, reference to, or inability to use this podcast or the information we present in this podcast.