Tactics to grow in the convenience channel  

Date : 20 April 2021

Charles Chan

Senior Retail Analyst

The convenience channel remains a great opportunity for growth. We have published a series of new reports for our IGD Retail Analysis subscribers:

Below are some of the key highlights to help you plan for the future...

Use IGD’s view to drive change internally

Ensure convenience is part of your omnichannel strategy

The integration of technology in convenience retail has accelerated following the pandemic, meaning stores now have a wider role in omnichannel strategies, e.g. offering a convenient location to collect online orders and partnering with on-demand platforms for online delivery to meet convenience needs in the home. 

Maximise the agility of the convenience channel

The convenience channel innovates at pace. Convenience retailers in Japan, for example, launch approx. 100 new SKUs every week. Low selling products can be discontinued as quick as one week, and so the pace is quite different compared to other channels. In discount, for example, suppliers tend to have little influence on product position or display. The main contact point is focused on an annual negotiation, with listing opportunities often limited to yearly and seasonal.

The flexibility of the convenience channel means that retailers have a fantastic opportunity to test and develop new formats, reach new types of shoppers and roll-out initiatives at scale quickly. Convenience stores initially have lower investment costs, shorter maturity cycles (as fast as six months) and can occupy more flexible spaces.

Share resources to improve profitability

It is important to recognise, however, that longer term, small stores can face high labour costs and trade tight margins. Multiformat retailers can offset some of these costs unlike convenience specialists. With online shopping also squeezing profitability, the ability to share resources is becoming even more important.

Embrace creative and imaginative designs

Launching time-limited products to coincide and celebrate special milestones is a great way to drive engagement, while timely merchandising can also be very effective.

Brands and private label can co-exist

Private label remains a hot topic globally, delivering value to customers and helping retailers drive better profitability. Find out where your brand can overlap with private label. Tactics do vary globally, in Asia for example, private label can gain quick recognition and positive association by young consumers sharing product reviews on social media. Furthermore, promotions that combine private label and brands can be successful.

Surprise and newness important in convenience retail

With visit frequency higher at convenience stores, offers should be more time-sensitive to create a sense of individuality and surprise. Multiformat retailers trading convenience stores face even greater scrutiny when it comes to price differential, with consumers comparing between retailers, as well as between formats operated by the retailer.

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