We had a great day at the Convenience Retailing Summit earlier this month where we heard insightful case studies from leading retailers and suppliers in the channel. To provide you with a roundup of the day and in case you missed it, here I outline the key themes:
Our Chief Economist, James Walton, and Head of Retail Insight, Guy Ousey, opened the day with an overview of the current economic position and our latest thinking on convenience, including our brand-new channel forecasts. Inflation is returning and after a long period of decline, food and drink prices are now rising once more.We have increased our forecasts by year to reflect the effect of inflation. Overall market growth now stands at £28bn to 2022. Looking ahead, BREXIT creates some uncertainty around trade and labour movement.
The convenience channel is well placed to benefit from urbanisation and perceived time pressures. Over the next five years, there is a £7bn opportunity in convenience. The channel will remain the 2nd largest and is forecast to grow by 18%.
You can find the full market and channel forecasts here.
Increasing importance of saving time
Busier lifestyles mean shoppers are looking for ways to save time, and smaller stores with fewer items can help them do this. Michael Freedman took us through our new shopper research showing the increasing importance of time for the UK shopper. More shoppers are choosing to shop in a convenience store because it is quicker and easier in-store with 57% (Dec-Feb’ 17) versus 53% (Sep-Nov’16). Post-millennials are more willing to pay a premium for saving time than older adults with 54% saying that they sometimes go to the nearest store even if it is more expensive, versus 40% of 26+ year olds.
McColl’s Chief Exec, Jonathan Miller took us through McColl’s transformation in becoming a ‘true convenience business’, meeting a wider set of shopper needs. He then revealed the findings from our research project with McColl’s which explored the increasing importance on the value of time. Shoppers spend 16.7 hours per month on shopping alone which equates to a whole day. If the share of trips allocated to convenience were to rise 50%, time spent would fall to just 14 hours per month. Convenience stores offer significant time savings across all missions, compared to other channels. For instance, people can almost halve the amount of time it takes to shop for an evening meal, with the average shop taking 25 minutes in a c-store versus an average of 46 minutes (including time travel) across all grocery channels.
Convenience stores not only give pressure time back to the shopper, but also act as a community hub, provided they have the right service offer. Providing a service hub helps drive incremental purchases. The research found that 44% of those using a service on their last visit to a convenience store also bought fresh food. You can download full findings from our research with McColl's here.
Tracey Clements outlined the different lifestyles and shopper needs of Tesco’s ‘Five Families’ and highlighted that despite their differences they all place equal importance on the value of time.
Catering to different missions
Michael Freedman outlined why convenience stores are well-placed to capitalise on changing shopper missions including top-up, food-to-go and evening meal. One of the themes he outlined was the importance of post-millennials. This age group are particularly engaged with the convenience channel, with one in five 18-25-year-olds mainly shopping in c-stores. This is because of their preference for shopping ‘little and often’. Brands should use this as an opportunity to create products that have a clear role in shoppers increasingly busy lives.
Meal times are becoming less rigid, with more shoppers eating on-the-go. The traditional sit-down breakfast has dropped to only 3% and the average breakfast time is now only 6 minutes, decreasing YoY. Weetabix has used this as an opportunity to create its new on-the-go breakfast drink. Becky, Head of Sales for Drinks shared the ‘from box to bottle’ journey and the different go-to-market strategies that it has used to attract both ‘buy now drink now’ and ‘buy now drink later’ shoppers. The drinks brand is well-placed for the convenience sector and after three years is now worth £15.5m
In 2016, The Co-op redefined its categories to align to the step change in the way shoppers interact, for example, fast missions in urban environments. This involved a range change in every category and new food-to-go trials being introduced. Richard Crampton highlighted the need to rethink categories as missions.
David Harland from SPAR UK, used Paul Stone’s Manchester city centre store and Marple village store to highlight the importance of making convenience stores mission-focussed. In the video we saw a comparison of the two stores in terms of layout, range and offer which reflects the contrasting missions between a village location and a city centre location.
Tracy Clements spoke about Tesco’s effort to cater different missions including top-up, evening meal, and food-to-go. Tracy highlighted how One Stop and Express are two different businesses with different customer needs. One Stop values its strength in impulse but is broadening its offer to align with changing lifestyles by offering food-to-go and food for tonight options, including broadening its meal deal and adding coffee machines. Tesco Express is aiming for a relevant and sustainable offer through a 46% reduce in master assortment, a range reset, increased product innovation such as craft beers and vegan options, which will ensure greater relevance in different catchment areas.
Prioritising health and nutrition
Shoppers are more aware of what is considered healthy and are increasingly buying health brands and specific foods and ingredients. If there is no suitable product available, they are likely to go elsewhere. Convenience stores need to embrace a better balance between health and impulse to meet the evolving demand for products with nutritional benefits and free-from.
Chris Martin stressed the increasing consumer appetite for health and nutrition, and the importance to prioritise it. Centra has used its ‘Live Well’ campaign to encourage people of all ages to adopt a healthy and active lifestyle. Healthier food ranges, including huge proportion of fresh and health products such as nutrition bars, are underpinned by a heavyweight marketing campaign. PR, digital and social media activity which has helped Centra to increase additional awareness and engagement.
The healthy snacking mission is a huge opportunity for branded NPD. Rosie Joly took us through Propercorn’s journey to becoming the number one premium popcorn brand in the symbols sector. Using only natural ingredients, Propercorn uses simple messaging to its simple nature as an easy solution to the unhealthy snacking problem.
Tobias Masmuht, Managing Director of SPAR International, shared an example of how multi-format retailing can benefit different groups, including those who value health and nutrition above all. SPAR opened its health-focussed ‘SPAR Natural format’ in Gran Canaria specifically to target ‘Yeepies’ from Northern Europe who frequently visit the island on holiday. ‘Yeepies’ refers to a group of retired-age consumers who are very active and prioritise health and wellness. The format features vegan, free-from, vegetarian, healthy and fresh ranges.
Building better plans for now
Case studies from key retailers and suppliers in the channel shared how they are building better plans for now and what you can do to put your business on the front foot.
Acquiring robust data on symbol and independent stores and turning that into an actionable package is not easy but the case study from Pierre Jackson, Pepsi Co, showed us how it can be done. Pierre talked us through two markets, Spain and the UK, where Pepsi Co unlocked data to achieve success through analysing lots of different variables to make listings for symbols and independent retailers based on a set of complex inputs. Since the data program, Pepsi Co has had a sales uplift of £14m and launched three more products in stores.
Darcy Willson-Rymer shared Coscutter’s six shopper personas which are used for the retailer's 'Shopper First' programme. He then offered a practical way forward in the form of a modernised store package which uses a breakdown of the local catchment. This is used to encourage retailers to improve store standards with layouts and ranges targeting the specific needs of the local community. For shoppers, this ensures ‘greater relevance, greater choice and a better experience.’
David Harland shared practical case studies of how suppliers have been working with the retailer on plans for now, after he called on suppliers to do more last year. This included a case study of how BREWDOG are tailoring plans to ensure the right ranges are in the right stores by focussing on missions. David also shared a private label example of finding the right supplier to ensure a private label healthy snack range was launched at pace. The range was a success and had a halo effect with a sales uplift for branded snack ranges too.
Tracy Clements discussed how Tesco is in the process of changing its convenience offer to serve local shoppers a little better every day, stressing the importance of local service in the multiple convenience sector. Despite serving 25m customers, Tracy told us that Tesco’s aim is to ‘treat every customer like the only customer’.
McColl’s is back on the acquisition trail aiming to add 40-50 shops from existing locations to its portfolio per year. The retailer also aims to complete a full national refit of existing stores with a developed offer including extending food-to-go, more fresh and chilled and more meal solutions including healthier options.
We set out to provide you with practical and actional insight that can help you grow your business and maximise your personal performance.
We are happy to announce the Convenience Retailing Summit 2018 will return to etc Venue, St Pauls, London on 5th June next year. Register your interest to be the first to hear about the speaker line-up and for your chance to get early bird tickets.