Service Design: Innovating a Convenience Store / Gas Station Chain
What would you do if you can make ANY kind of innovation to a gas station chain?
Table of Contents
- Overview — Problem & Solution
- Research — Developing a Focus
- Refinement — Convincing Client
- Addressing Risks — Additional Interviews & Research
- MVP (Minimum Viable Product)
Overview
Our client is Emily Sheetz, Sheetz’s associate Vice President of Strategy. The requirement for our team is to design a single innovation for the product-service-system of Sheetz, and when Emily talks about innovation, she really means it:
Our mission at Sheetz is to create a business that puts the Sheetz as we know it today, out of business.
— Emily Sheetz
Sheetz, a family-owned gas station and convenience-store business, is looking to innovate itself into a leading player of the future technology-infused retail environment.
An innovation needs to leverage Sheetz’s current advantages and establish a sustainable business model or improve upon the current solution.
Solution Summary
We propose Sheetz Gear Rental, a service alongside Sheetz’s current convenience store / gas station business, intended for campers, hikers, and road-trippers to rent and pickup gear from a convenient Sheetz location.
Sheetz will co-create value with a sports gear rental partner, and customers.
- The gear partner, such as REI, who already has rentals at their stores, will provide rental gear;
- Sheetz stores provide employee support and strategic rental locations near highways and campsites;
- Customers pickup from a Sheetz & drop-off used gear to any Sheetz.
An overview of how this service will operate, front-stage and back-stage:
Sheetz doesn’t need to charge gear rental partners, but can attract them with better locations. We expect that Sheetz will gain an estimated $14.7M/yr in revenue just by bringing in more rental customers inside Sheetz stores to spend on convenience store items and gasoline.
Details
- This is an eight-week class project for Service Design, Fall 2019, Carnegie Mellon University
- Team Members: Erine Ho, Irene Lin, Calvin Lui, JL Singson, Olivia Xu,
Research — Developing a Focus
Sheetz is a Pennsylvania-based, family-owned business with 600 stores spanning across multiple east coast states (December, 2019).
Sheetz is known for its cheap gas, made-to-order food, 24-hour operating hours, friendly employees, and bright & clean environment.
The initial Focus was to make a better experience for long-haulers
Research Methods:
- on-site research at a local Sheetz
- online research about Sheetz, its competitors, and convenience stores and gas stations
- Q&A with a Sheetz Innovation Officer
- first round of consumer interviews
Key Insights:
- Majority of Sheetz’ revenue is from gas sales, but profit margins are thin since Sheetz has already optimized its distribution network; also expect no growth for gas sales in US market
- C-store in-store sales are growing, the average basket size is currently $22
- Customers on long trips spend more on both gas and food
At this point, we were leaning towards better in-store experiences to draw in road-tripper and long-haul customers. For example, long-haulers’ first to-do is going to the bathroom, so we thought of renovating bathrooms.
Narrowing Focus — Camping Gear Rentals
We went broad for brainstorming ideas.
Ideas
- attracting more customers to Sheetz (gear rental, Amazon locker service);
- “stay-awhile” for long-haulers (mini hotels, lounge, showers, clothing rental);
- expand Sheetz brand presence (food truck in urban areas);
- better in-store experience (better bathrooms, electric car charging station, better food choices, better Sheetz store app, gasoline price app, etc.)
We voted on our focus by considering ROI (Return on investment), co-creation, and amount of risk.
Gear Rental
After several rounds, we converged on outdoors gear rental. Gear rental has several characteristics:
- Gear rental is a high-value service, approximate prices from $50 to $200 per day
- High customer co-creation, with customer driving to a Sheetz for pick-up & drop-off
- Relatively low risk because we can get gear from a partner company.
Refinement — Convincing Client
We then focused on solidifying what this service might look like. We created the following artifacts for convincing our client that gear rental is a viable business for Sheetz.
Main Points
- Sheetz stores provide strategic locations for campers: many Sheetz stores are close to interstate highways; also, Sheetz stores towards the south are close to a popular trail, the Blue Ridge Parkway
- the camping market is growing, and most people, who do not have gear already, are likely to rent gear
- camping necessities includes many large and expensive items
- there are a lot of things a camper needs to purchase / buy for camping, especially if they’re new
At this stage, it is extremely important to bring our client on board. To do this as efficiently as possible, I made Visual Conceptual Models explaining the business opportunities within gear rental.
In the above model, to leave a strong “camping” visual impression for our busy clients, I chose a tent as a visual “map” for our camper statistics. I want it to put out a strong message: THIS GEAR RENTAL MARKET IS HUGE. This shows that 67% percent of all campers are our consumer targets.
Next, to demonstrate the value of Gear Rental to campers, by listing out the things they need. The following model shows that a backpack can pack very few items, but A CAMPER NEEDS A LOT OF BULKY, EXPENSIVE ITEMS TO FULLY ENJOY THEIR TRIP. So they are incentivized to rent.
We made a customer journey map to show how a gear rental service can benefit and attract customers.
Addressing Risks — Additional Interviews & Research
Methods
- Q&A interviews with targeted customers
- Speed-dating interviews with storyboards
- In-depth research into potential partner companies for gear rental
- Service Blueprint outlining responsibilities
Customer-side risks, and what to do with them
- Customers not willing to pick up and and drop off items → Additional customer research to find out willingness
- Customers don’t want to rent the Sheetz-select camping items→ Additional customer research; Partnership with vendor who is familiar with target segment
- Customers are concerned over quality → Partnership with vendor who is known for good quality equipment
- Customers lose or damage items → ask for security deposits; get damage insurance for gear; Partnership can decrease risk
- Capital from equipment purchase is not recovered → Partnership with vendor who owns equipment can decrease cost of ownership
These risks can be mitigated by investigating further into customer preferences and rental processes.
From our target customer interviews, we gathered valuable insights about what campers bring each time, what they would rent, consumables they purchase for every trip, and in-store impulse purchases.
With these insights, we conducted Speed-Dating interviews to find out customer preference. Results are incorporated in our service blueprint in the next section about our MVP.
We looked at existing rental businesses to understand how partnering could mitigate some of our risks. They share the same disadvantage — gear rental companies do not have good locations for customers to easily pickup gear.
MVP (Minimum Viable Product)
Our MVP prototypes the launch of Sheetz Gear Rental, the initial stage of the service to verify demand. We are prioritizing fast speed of initial setup and low cost of capital.
Risk Summary
The major risks in three segments:
Service Blueprint
Our service blueprint outlines the responsibilities for Sheetz and partner company.
MVP Prototypes
- A look at Sheetz Gear Online Reservations, if we’re partnering with Arrive, a company that ships gear to customers
The most important part of our MVP is showing clients that we can have an inexpensive version of this service for the initial stage. We decided that a floor plan is a great visual explanation of how much we need to change within a store to implement this service.
In this MVP floor plan, we make minimal change. I used differentiating green and orange colors from Sheetz’s visual identity designs to highlight what needs to be changed: repurpose part of the existing counter space for Gear Rental personnel; have a drop-off bin outside of the building. No additional infrastructure.
We need our client to see that this change is quick and inexpensive.
- Floor plan, requiring no additional infrastructure; for a late-stage version, see the end of this article
Even though Sheetz provides locations and labor to partner for free. Sheetz earns incremental revenue by bringing in more customers who will make purchases.
To let the client empathize with a customer who would purchase items in Sheetz because of the gear rental process, I made a visual customer journey to effectively show our customer process.
Key moments:
- any interaction between the customer and a Sheetz employee, to show how much training is needed from Sheetz;
- when the customer make their purchase decision inside a Sheetz store, leveraging items that Sheetz already provides;
- how the box of gear box is passed around in order to mitigate risks of hygiene and property loss
Customer Experience Walk-Through with Visuals
- Pre-camping, customer will Pickup Gear Box (all gear for two people, including tent parts, can be contained in a reasonably-sized box) at counter with an employee, who answers basic questions (minimal employee training)
- Inside Sheetz, customer will Purchase Consumables, including an essentials kit and food pack; also, fill up gas
- Go to campsite, stop at another Sheetz on their way home
- Customer will Place Dirty Gear in Outside Bin
- Inside Sheetz, customer will Grab Hot Food, Fill Up Gas, and head home
Value Proposition
- We estimate that there are about 2 Million potential customers for Sheetz Gear Rental
- Sheetz, Consumers, and Rental Gear companies co-create value
I made visual artifacts to showcase the service.
This poster is intended to be placed in a Sheetz Store, maybe next to the cash register, explaining to customers what this service is, and how easy it is. The next time they want to go camping or hiking, they can come to Sheetz for gear pickup.
Beyond the MVP
After testing out the MVP, Sheetz Rental can move on to later stages to address a large need.
Sheetz Gear Rental Roadmap
Once we verify demand, we can build infrastructure inside stores for more storage and personnel.
In this future floor plan, I took a larger portion of the store to make the gear rental section a relatively separate area, to accommodate logistics and storage needs, while still making sure that customers will walk in the store for pickup, and drop off dirty gear from the outside. We need the client to see how the business can become modular for every store in the future.
Future Steps for Design Team
- We need to verify the willingness of partner companies, with the help of Sheetz officers to discuss details.
- Sheetz has an excellent distribution network for goods and gas. This network can adapted for distributing gear.
- Employee interviews and test-runs to see potential problems with customer pickup & drop-off
