Convenient competition

For as long as anyone can remember, convenience retailing has been prominent across the UK. In 2010 the sector is still growing in importance with over 33,500 local stores* operating in the UK. SPAR, like most convenient stores, is a local store, with a convenient and relevant offer for its customers.

Over time, the marketing within local shops has changed and shopping has become more focused on the weekly shop at the larger supermarket. Perception of local has shifted, consumer habits have changed and the ability to deliver exactly what the local customer wants/needs has come under question.

Recently, we have witnessed the beginning of another shift, back to local and a more extended use of local stores. A number of the multiples have recognised the opportunity and have moved into the convenience territory and shown the consumer how to shop locally again. Tesco Express, JS Local, M&S Simply Food and most recently Asda have all announced plans of continued growth in this area.

Although, convenience (speed and closeness) is by far the key reason for choosing a convenience store, it is no longer the only reason. Customers want more, expect more and in truth deserve more. They have more choice and therefore can be more selective about where they shop and what they buy. Product range, price, availability, service and quality (of fresh produce, meat and fish) are now all primary needs to the convenience shopper. This reflects the fact that topping-up the main weekly shop and shopping for meals have been added to buying daily needs as the most common reason for convenience shopping. This does however represent a massive opportunity as the value of these shopping visits is much higher. For example, research shows us that the value of a daily needs shop is under £5 whereas a top up shop is worth up to £10 and a meal shop can attract up to £15.

There is no doubt that the multiples have raised the bar in delivering against these needs and as a result, the sector has become more crowded and more professional, and to survive convenience stores have to react and change. This involves adapting to meet what customers want today. For some convenience stores, this may be a step too far. For others change could secure the success of their business for the long term. Small stores must adapt and change now – waiting could be too late.

Symbol groups, like SPAR, can help as they provide something different for the independent convenience store owner meaning that they can remain independent but enjoy access to collective buying and marketing power. With multiples’ massive budgets and media spend, the need for marketing (in the widest sense) is even more important today and will have a huge role to play in the future.

When we talk about marketing in this context, we need to consider it in the widest sense. The consumer is exposed to 5000 messages each day of which they notice around 1% and retain 0.1%. Therefore, it’s vital to create relevant touchpoints with consumers and multiple media choices are key to achieving this. The precise choices will depend on store type, location, objective etc but could include store layout, product range (including own brand and packaging), point of sale, signage in and out of store, leaflets, radio, TV, press, magazines and online. The key is to follow the customer journey in and out of store to ensure the messaging is as relevant as possible.

What is clear is that the multiples are only going to grow stronger in the convenience sector and it is the responsibility of all convenience retailers to take this challenge head on and seize the opportunity. If stores do not change and adapt to meet these new challenges, they will not survive.

* Association of Convenience Stores