The two speed convenience market
Taken as a whole, the convenience market is in very rude health…
Him! tracking research revealed that the average spend in this channel increase from £6.05 last year to £6.52 this year against a background of price stability, combined with an average of products purchased that has hit 3 for the first time in 10 years.
Some store groups are really committed to expansion – The Coop has pledged to open 100 in 2015 despite its torrid recent financial past. M&S(38.1%), Sainsbury Local(14.9%) and Little Waitrose(13.3%) as the upmarket offerings all growing by over 10%.
But there are exceptions
However Tesco and Morrison are exceptions, with Tesco, the largest chain at 2,347 seeming to be peaking, as it has announce the closure of 43 underperforming Expresses. This despite also announcing that the two Golden Children were online and Express at the end of last year.
Morrison admitted they were “not seeing the level of performance”
Meanwhile Musgrave have sold out their loss making UK convenience brands, Budgen and Londis.
What is associated with success?Him! note that c-store shoppers are buying more on promotion – but still not as many as in the supermarkets – only 20% of the basket. However, the increase in basket size shows that people are looking at more areas than ever before. The increase seems to be due to a percentage of shoppers buying over 5 units, rather than a wholesale move up. The number of shoppers buying just one item has moved not at all with an average of 30%.
However, the number of people buying on impulse is up to 20% from just 17% in 2014, and 6% in 2000.
It’s Promotions Jim, but not as we know it…
When you set up a convenience store it’s all about location, location, location.
It’s exactly the same inside the store. Retailers need to know what products their customers would like, and then make it really easy for them to be seen. We carried out research with a major confectionery company, and this showed that the further away you were from line of site at the till, the less effective your POP display was. On the other hand, POP on the way in, and in particular, outside the store was effective.
Path to purchase also works well here. Him! also reported that one in 5 shoppers received leaflets from their local retailers, and a massive 62% of them said they encourage them to visit the stores.
You would think, if you listened to all the commentators, that it was all about price. To an extent, it is, however, 37% of people bought an unintended item, the remainder switched between product or brand.
Key locations for convenience stores are the checkout queue, the path to purchase for signage and home based
couponing. Getting people to move outside this can be very challenging. Here you might think that a standard Mars display layout is just what you need. However, times are changing and more and more city centre people are into Healthy Eating. This is a phenomenon we call Urban Health.
Increasingly for lunch people are choosing healthier snacks that don’t give them the sugar rush. The picture heading this article is of a heavily shopped checkout fixture for Food Doctor, one of our clients. The snack bars at the top are down to a token few, and most of the full bay has been very heavily shopped. However, this store was not ranged by Tesco for this product. With confectionery purchases according to Him! in a rapid downward spiral (27% to 19%) this should be a wakeup call for convenience stores to look outside of the main sugar brands to healthy alternatives. This is a huge growth area that is under-recognised at the moment on the High Street. RVS are working with a number of brands challenging the unhealthy in an area that is great for store PR and sales equally.
It’s not all about Price
Most c-stores have absolutely no idea what sales they expect to get from a promotion. However, if you, as I do, move from store to store you rapidly get the picture that promotion prices empty shelves. Given that 37% of people added a product to the basket because of a discount, it makes sense to over face special offers dramatically from day 1. The promotion space is the most important that stores have, and it should face the shopper as dramatically as possible. This is a Ramadan end for a local Tesco store facing the entrance. Light on Ramadan messaging, but very heavy indeed on what matters to Ramadan shoppers.
Increasingly, too, companies are realising the benefits of stopping shoppers with non-price initiatives. Branding is becoming really important to c-stores. Coupons are one way that brands and retailers can work together by offering the opportunity to bring people in.
Other ways would be to link sales of destination product through to other product. This is something that, as an example, WH Smiths do when they offer you product at a discount with every purchase.
Great idea, that would be even better if the two together were tied at the shelf (buy this, and this and get a discount or your money back).
Display, as well, is paramount, in building high visibility product. RVS identify core shopper needs in areas, and these should be to the front of any offering. Since shopper in convenience do act on autopilot it is vital to ensure that any messaging is as “in their face as possible”.
Core2Store have trialled various approaches to build that additional sale when you know there is a real compatibility between two products.
Position your core products right at the front (but do make sure you understand what they are first!)
Position POP around them
Position bags (or cartons or cans) of stock so they can’t miss the message, and can’t avoid buying
Bring them in with a message in mind
Move your two speed shoppers up a gear by spending time understanding them