With consumers favouring a “little and often” approach to their food shopping, convenience stores are ideally placed to increase market share.
Currently valued at £33.6 billion, the sector is set to grow to £42.2bn by 2016, research from the Institute of Grocery Distribution shows.
“A large amount of that growth comes from convenience multiples and symbol groups,” says David Shukri, IGD’s channel research manager. “Store numbers are increasing in both parts of the market, and the increased presence of the multiples in convenience has been a major catalyst for development within the symbol segment. Fresh food ranges have played a big role in demonstrating to shoppers that affiliated convenience retailers have a complete offer and can fulfil the full range of shoppers’ needs. By and large, we now see a much more professional convenience sector that caters to more shopper missions much more effectively than ever before.”
According to IGD, shoppers turn to c-stores in a bid to save on petrol costs. Half of the people surveyed by the institute said they would shop locally if fuel prices continue to rise. Some 46 per cent of c-sector shoppers, who on average visit a local store three times a week, also said the ability to walk to a shop from their home was a key factor when choosing a convenience store.
From the retailers’ point of view, being able to tailor their offering to the local community is the main advantage convenience stores have over the multiples. “Due to the smaller size of Express stores, we specifically choose products which our customers tell us they need, so that the stores provide everyday essentials which customers want to stock up on regularly,” says a Tesco spokesperson.
Since the company opened its first Tesco Express store in 1994, it has expanded to 1,285 Express stores across the country. Last year alone over 200 new stores were opened and more are planned for the coming year. Crucially, it’s not just the number of stores that is increasing; last year Tesco had 80 million more customer visits to its Express stores than in 2009-2010.
Meanwhile Morrisons is planning to open hundreds of convenience stores over the next few years following the successful launch of the first two
M local shops last year in Ilkley, West Yorkshire and Manchester. Unlike the other multiples though, Morrisons will match its supermarket prices to the local stores in order to “enhance the brand perception”.
Morrisons is not alone in realising that delivering value for money is paramount. “A key challenge for the c-sector is to deliver value for money to shoppers while still maintaining a point of difference as the major multiples continue to grow the convenience market,” says Kenton Burchell, head of trading operations for Musgrave Retail Partners GB, which comprises Budgens, Londis and Centra stores. “Budgens has introduced its ‘Tesco Price Match’ initiative to run alongside its category development work on fresh produce, investing in over 30 lines in the produce category using the Tesco Price Match strategy to improve customers’ perception of Budgens as a store that consistently delivers value for money.”
Fresh produce is being given high visibility throughout the stores and the strategy is to make the chain famous for fresh foods. “Based on consumer and retailer insight, Budgens has developed a strategy for fresh produce that includes all the basics of modern retailing along with all the expert seasonality flair of local farm shops and greengrocers. We have increased the range of loose fresh produce as well as introducing more seasonal lines. We work closely with suppliers to secure products that are not widely stocked in competitors, such as loose English premium tomatoes, wild mushrooms, sloes, kiwi berries and Seville/blood oranges. Budgens is seeing an eight per cent uplift in fresh produce sales as a result,” says Burchell.
But making fresh produce a hero category can only happen if it is displayed in the best way, he adds. “As part of achieving our ‘modern greengrocer’ look and feel Budgens has focussed on creating truly different fixtures in stores. These include seasonal tables with wicker baskets, outdoor display stands, low level units and paper bags for the increased focus on loose products. Colour photography is used on point of sale, including information about the produce, and there are recipe cards for customers.”
Certainly, good ‘retail theatre’ can make a significant difference to a shopper’s perception of the quality and value of produce, agrees Shukri. “From our regular store visits, IGD knows that a strong focus on making the most of fresh food can make a real difference; we saw a good example on a recent visit to the new Loco convenience store in Gosforth. It takes time and dedication to maintain a good range and display, but it will very often drive footfall and increase the shoppers’ spend per basket. Locally sourced products and strong convenience-orientated promotions are also warmly received by c-store customers.”
This approach makes a lot of sense, as customers are increasingly interested in the quality and provenance of fresh produce. Budgens works closely with English growers to ensure the delivery of the freshest produce to stores, explains Burchell, and this includes English apples, pick’n’mix tomatoes as well as the very early season English asparagus. The retailer’s strawberries are delivered from fields in Hampshire where they’re grown to stores across the country within 36 hours of being picked.
But supplier relationships extend far beyond delivery of fresh and seasonal produce to the distribution centres and stores. “We utilise the expertise of our supply base in order to educate and engage our retailers and their staff, who attend workshops covering all operational elements, brand awareness and customer service,” explains Burchell. “For example, a group from our buying team and Budgens retailers visited our retailer service centre at Wellingborough and then followed the supply chain back to root vegetables supplier Fenmarc to see the harvest of the parsnip crops. They all gained a better understanding of fresh produce as they followed the material back to the packhouse, where tour guides explained the processes involved in getting the end product right.”
“Training is very important and it is often an overlooked or underestimated aspect of the overall fresh proposition,” agrees Shukri. “Who else will maintain availability and ensure the on-shelf quality? Bearing in mind how quickly fresh food deteriorates when mishandled, retailers simply cannot afford to let this aspect go unchecked.”
The Association of Convenience Stores’ CEO James Lowman echoes his sentiments. “It’s crucial not just to have staff awareness of fruit and veg, but also someone who is responsible for the category,” he says. “Having a fresh produce champion doesn’t just improve the merchandising and management of the category, but really good staff go the extra mile by getting out into the community and forging links with schools, suppliers and health workers.”
One clever way to reach out to schoolchildren is through the Change4Life project, which Lowman says could really benefit local shops. “The multiples have spent a long time building their brands for fresh produce. Our sector has started behind them and is catching up, but Change4Life gives a bit of extra credibility to persuade the customer that we’re credible places to buy fruit and veg. We’ve seen very impressive uplifts from the Change4Life brand.”
Another advantage convenience stores have over multiples is the opportunity to reduce food miles and thus appeal to eco-conscious customers. It’s a trick that shouldn’t be missed, thinks Lowman. “Even in urban areas there are opportunities to link to local suppliers. There’s a real opportunity for retailers to work together to develop more viable and sustainable systems for distributing produce in an area, and to add some unique local flavour to their offer.”
In terms of the challenges the c-sector faces in the next couple of years, Lowman thinks they are getting frequent distribution into stores, managing the category well in store, and persuading the customer that local stores are credible destinations for fresh produce.
“The common issue with all of these is about investing in wastage, and creating a mindset about quality, not just cost.” -
No comments yet