All change for convenience

Date : 29 October 2013

Our Shopper insight manager, Michael Freedman, looks at how the convenience store of the future could be very different and help shoppers fulfil more missions.

Untitled 1

Convenience in a multichannel world

As IGD’s shopper insight expert on the convenience channel, I am often asked how convenience store shoppers differ to main supermarket shoppers. The answer is simple - they are mainly the same people. Our latest Channel Focus tracking results shows that 85% of adults had used a convenience store in the last month.

What’s different is their approach to shopping, behaviour and expectations, when they are in convenience stores (c-stores). The shorter time they spend in c-stores than in supermarkets, the lower amount they spend there and their focus on topping-up on a few staple products such as bread and milk rather than completing a full shop.

However, there are signs that the world is changing. The perceived limited scope of convenience stores may well be consigned to the history books.

More multichannel shopping as lifestyles get busier

Our ShopperVista insight has shown an increased trend for multichannel shopping. In August, more than six out of ten (62%) of shoppers said they use three or more grocery channels for their food and grocery shopping, the highest level we’ve recorded since December 2011.

Our forthcoming Shopper Trends 2013 Q4 presentation, to be published on ShopperVista at the end of October, will look at what is driving this trend for increased multichannel shopping. One of the key themes we are seeing is that many shoppers are interchanging between different channels such as discounters, supermarkets and convenience stores to fit in with their busy lifestyles.

 

This is having an impact on the traditional role for each channel.

Supermarkets and hypermarkets, for example, are traditionally where shoppers do their main weekly shop, while the other channels fight it out for any other missions. During accompanied shop interviews with shoppers, more shoppers are conducting top-up shops in larger store formats. At the same time more are conducting a main shop in other channels.

Almost half (45%) of all shoppers in August claimed to shop at food discounters, with one in ten (10%) now using a discounter for their main grocery shop – the highest level yet recorded.

While initially it was discounters’ low prices that attracted shoppers, it is now the quality of their products that is making them popular. Shoppers also tell us that they are likely to continue shopping at discounters even when their personal economic circumstances improve. Their ability to do so will be helped by Aldi and Lidl’s investment in new stores to build their reach in cities and communicating more about their fresh and premium ranges.

Shoppers are telling us that they are changing the way they use c-stores as well.

Our latest Channel Focus tracking results showed a near doubling from 5% to 9% who said that they used their main c-store to conduct a main grocery shop between May and August. This may be a temporary blip, influenced by the warmest, sunniest and driest summer since 2006. However, there are signs that convenience could be more of a destination shop in the future for shoppers.

Changing store design to meet c-store shoppers’ needs

Convenience retailers are increasingly developing more relevant formats and categories that effectively meet the changing needs of convenience store shoppers. We are seeing a move away from a ‘one size fits all’ approach to one in which different c-stores are tailored to their local catchment area e.g. providing food-to-go near train stations.

Change is coming to the convenience channel, however, it should not be assumed that all c-store shoppers will welcome this with open arms.

Our latest Channel Focus report on Missions and Merchandising in Convenience Stores reveals that convenience store shoppers are relatively evenly split whether they want changes to store layouts. While older shoppers are more resistant to change, three in four younger shoppers are open to change in store layout. These are the shoppers that will help shape the convenience store of the future.

C-store shoppers rank the following as the top three changes they would most welcome to store design:

Top changes preferred to layout of main c-store:

1. Have more food counters

2. Group healthy products together

3. Locate all fresh at front of store

These results show that there is a desire among some c-store shoppers for retailers and suppliers to make it even easier to conduct their shop and thereby save time. So they’d like to have similar products in the same section of the store, rather than making them visit different sections of the store to get these items.

Topping-up on a few staple products such as bread, milk and eggs is clearly the current top shopping mission at convenience stores. However, we have identified more than 20 shopper missions at convenience stores.

Our research shows that there is a significant opportunity for suppliers to help retailers provide a range of solutions, such as providing products to make an evening meal grouped together, to meet different shopper missions to help retailer differentiation.

Opportunities exist for grocery companies to further increase the number of missions or even alter this established behaviour by using eye catching merchandising that reminds shoppers of products that they may have forgotten to buy.

With convenience channel sales set to increase by over £10bn to £46.2bn by 2018 (according to our latest Retail Analysis forecasts), it is going be critical that suppliers are nimble enough and innovative in their approach to meet the changing requirements of the channel.

Find out more about the ‘hot three’ areas in UK grocery

If you’re looking for more insights on the three high growth channels – convenience, discount and online, take a look at our brand new service: Channel Focus. Each quarter we talk to a nationally representative sample of 1,000 shoppers of each of these channels to really get to grips with how they are adapting to this changing retail world. Get up to speed now!

Download your free guide on Unlocking opportunities through convenience store merchandising.

While IGD's Convenience Retailing 2013 conference, 21 November, offers a wide range of insight from across the sector to help you get up to speed with the evolution of the sector and provide you with an invaluable chance to network with your peers.