Surfin' the C-Store

No one will ever mistake a convenience store for a big-box office supply store that offers business services. Space is at a premium and retailers have to justify margins. But customers can still perform basic services. Need to fax urgent correspondence or copy documents quickly? Sure, no problem. Need to surf the Net, order e-commerce merchandise or send e-mail to a friend? Possible problem. With a few notable exceptions, integration of Internet services into c-stores is moving pretty slowly.

Currently only a handful of c-store operators have Internet programs up and running. One chain having great success with the Internet is Brigham City, Utah-based Flying J Inc., with 156 Flying J's stores at truckstops in 38 states. Its program, the RoadLink Kiosk, has been in 130 stores for seven years now.

"Since truckers are a huge part of our core customer group, we wanted to establish a computerized program that would help them," said Mike Nichols, director of plaza services for TON Services, a wholly-owned subsidiary of Flying J. "RoadLink Kiosk has a touchscreen, full-size keyboard, cash and coin acceptors, scanner and a card reader. It performs key functions for truckers, such as document imaging. For example, a trucker could image a bill of lading and transport it to the trucking company electronically. They can also get the best route between two points using Trip Routing, a link we have with the Rand McNally company." Since TON Services is a division of Flying J, the company develops, installs and maintains the kiosks itself.

The kiosks are located inside the c-store near the driver's lounge, with some busier stores having three machines available. Services vary by price ? 20 cents per minute for Internet access; copies, 25 cents per page; and fax, $3 for the first page, $1 for each additional page. For

additional charges, users can also order prepaid phone cards, buy insurance and perform some banking functions. The kiosk may also have saved more than one marriage: "There have been plenty of truckers who haven't been able to get home for weeks and ordered flowers for their anniversary just in the nick of time," said Nichols.

Buoyed by the success of the RoadLink Kiosk, in 1998 the chain began test marketing a new program called RoadLink Internet Access Terminal, designed specifically for store customers who want to surf the Net and send e-mail. The first of 100 terminals rolled out in November 2000.

So far it has been difficult to discern any type of purchasing pattern or revenue streams that have developed, according to Rick Foy, vice president of MIS operations for the chain, who added that he hopes to have the program in 120 stores by mid-summer.

Another chain pumped up about the future of Internet services is The Pantry Inc., the Sanford, N.C.-based chain with 1,350 stores. The company has a pilot program in three locations using a kiosk system called Zstation, provided by Houston-based ZmailMedia. The communication lines and equipment were installed at no expense to The Pantry, which receives a percentage of the 25-cent-per-minute fee the customer pays to use the Internet. The only cost to retailers, according to ZmailMedia, "is the outlet we plug into."

"This program offers a number of services to our customers including e-mail, travel directions, maps, restaurant guides, event tickets and florist services, to name a few," said Pantry president and CEO Peter J. Sodini. "The potential is unlimited and provides our customers all these services at a 'convenient' location and reasonable cost." Plans are for 75 more kiosks to be installed by the end of the second quarter.

ZmailMedia also works with Macon, Ga.-based Walthall Oil Co., operator of 15 Walthall c-stores. "We have two kiosks that are being installed right now, one of which is at a conventional c-store with very high traffic for gas and in-store sales," said Allen Moore, vice president sales and marketing. "Customers will use it on a first-come, first-serve basis, and if it takes off, we'll order more."

Shop on Your ATM

Despite such successes, the attitude of many in the industry toward Internet kiosk service can be summed up in three words: Proceed with caution.

For many retailers, there are practical reasons not to offer Internet services. "One issue of concern is the location of older stores with limited parking spaces," said John Griffin, president of Rockford, Ill.-based Kelley Williamson Co., operator of Kelley's Markets, a 50-store chain. "Is a retailer really going to commit the space to have people come into his store for an hour at a time? Where are the margins to be made on something like that? I don't know if you can charge enough to make it worthwhile. Plus, prices are dropping for wireless connections, and you can now access the Internet on hand-held devices. Before we commit capital and space, there are hard issues to look at."

Take Tosco Corp., for example. The Old Greenwich, Conn.-based chain, which operates 6,300 c-stores, has a program called e-Place.com in place in 26 Phoenix area Circle K stores. According to Julie Igo, public affairs spokesperson, the company will close its one freestanding Cybercafe in the Phoenix area, and added that the company is in a "re-evaluation stage," and earlier plans to have as many as 140 kiosks in stores by January have been put on hold.

Web-enabled ATM technology could be another option for retailers in the near future, according to Dan Palczynski, group marketing manager for Convenience Touchpoints, part of the financial services division of Dayton, Ohio- based NCR Corp. "ATMs in c-stores are not used to full capacity and studies indicate that these machines are inactive 65 percent of the time," he said.

One company, iATMglobal.net, a subsidiary of Portland, Ore.-based TRM Corp., has already developed a complete turnkey program to access the Internet through ATMs. The machines can deliver a wide range of services, including event and travel ticketing as well as online banking. Net surfing would not be available, however.

"With a Web-enabled ATM environment, a c-store retailer can't have people surfing the Net because other customers are behind them," explained Palczynski. "Now from the retailer standpoint, the ATM serves as a point-of-purchase where they normally wouldn't serve that customer."

NCR is also working on the Depot Concept, a program with which c-store customers can use e-commerce to order merchandise over the Internet and have it delivered to their local c-store. "A lot of customers would rather deal with technology than a person," said John Saccamano, director of industry marketing for NCR, who added that implementation is the easy part. "Our research shows that self-serve technology is here to stay, but the question is, how do you position it in the c-store so people can use it? The technology needs to be conditioned to the customer base."

The issue may not be so much about customers who walk into a c-store, but potential customers, Palczynski stressed. "The whole point about offering Web-enabled ATMs and Internet kiosks is to get people into the store who might otherwise never walk through your door," he said.

And if there's a chance at creating a new profit center, you can bet that c-stores will be all over it. Casey's General Stores Inc., the Ankeny, Iowa-based, 1,270-store chain, for example, is another of the many retailers currently testing Internet kiosks.

At its 10 test sites, customers can browse the Internet, visit Web sites for weather and travel information and do general research. "Our customers enjoy the program and it has been made very user-friendly," said chief financial officer Jim Shaffer.