The 5.7% solution

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How much extra are consumers prepared to pay for convenience? Our exclusive study from ESA Retail calculates exactly how much extra multiple grocery c-stores charge for 
common items in small stores

It has long been an accepted fact of the small store industry that consumers can be expected to pay a little more for convenience. But in recent years the perception is that this gap has narrowed, and that shoppers are increasingly checking prices online before buying.

But major retailers still price items higher at c-stores compared with their online and large store offers, to offset the higher relative costs of running smaller units. And in a project exclusively for C-Store, retail service provider ESA Retail compared prices at the convenience and online, or large store, operations of multiples Tesco, Sainsbury’s, Waitrose and the Co-operative to establish the level of “the convenience premium”.

For each of the four selected retailers, the ESA team scraped a total 500 products from their websites, and in-store from a supermarket format store in the case of Co-op, to establish “main store” pricing. At the same time, they completed covert in-store price and promotion collections for the products in their respective convenience store formats.

Visits were completed at stores spread across England between 13-17 February 2017, with the prices of 310 branded and 190 own-brand products recorded to create an average price per category for each retailer and channel (see data tables right). The basket of products from each store chain was not identical, so the data cannot be used to compare retail prices across fascias, but the comparison was always made between the same product online and in convenience for the same retailer.

The key findings:

  • The three retailers measured with c-stores and an online offer (Tesco, Sainsbury’s and Waitrose) charge a premium of 4.5-7.3%, by either setting higher base prices or by offering a reduced number of promotions in convenience.
  • The total average ‘price of convenience’ across all four retailers is 5.7%.
  • The price of convenience was highest in Sainsbury’s, where customers in Sainsbury’s Local paid 7.3% more on average than those shopping on Sainsburys.com. This is followed by the Co-op (5.6%), Tesco (5.4%) and Waitrose (4.7%).
  • Although a premium was found on isolated products and categories in the Co-op, in general most products were sold at the same price in supermarket and convenience formats.
  • Both Tesco and Sainsbury’s sold a lower proportion of products on promotion in their convenience store formats when compared with their websites, although this may have been affected by in-store compliance.
  • Only Waitrose prices its chilled milk products consistently between its website and c-store. Prices: Tesco semi-skimmed milk 1.13ltr 75p online, 80p Tesco Express; Sainsbury’s British semi-skimmed milk 1.13ltr 75p online, 85p Sainsbury’s Local; Co-op Fresh semi-skimmed milk 1.13ltr 89p in both Co-op supermarket and convenience stores; Essential Waitrose semi-skimmed milk 1.7% fat 1.131tr 89p both in Little Waitrose and online.
  • On average, the greatest premium was found across the beers, wines & spirits category, where convenience store prices were on average 8% higher than their online/main store equivalents.
  • The findings demonstrate the extent that large multiple operators add a premium for shopping in small stores compared with shopping online, setting a benchmark for c-store pricing and giving small store owners a rationale for “the convenience premium”. It also highlights potential tactical opportunities in categories where the pricing gap is widest.
 Tesco.com Tesco Express % Diff 
 Ambient   £1.38 £1.43 3.7%
 BWS £10.97 £11.76 6.7%
 Chilled     £1.62 £1.70 5.1%
 Frozen £1.79 £1.91 6.5%
 Health & Beauty £3.41 £3.53 3.5%
 Non Food £1.69 £1.80 6.4%
 TOTAL £2.51 £2.655.4% 
 Waitrose.com    Little Waitrose      % Diff 
 Ambient   £1.48 £1.56 5.0%
 BWS  £8.33  £8.72 4.5%
 Chilled   £1.95 £2.05 4.8%
 Frozen        £4.00 £4.18 4.3%
 Health & Beauty                      £3.66 £3.83 4.4%
 Non Food                                £2.33 £2.44 4.4%
 TOTAL £2.39 £2.51 4.7%
 Co-op s/market  Co-op         convenience       % Diff
Ambient  £1.58                  £1.64                     3.6%
 BWS £11.57 £12.85 10.0%
 Chilled £1.97 £2.01 2.0%
 Frozen      £2.45 £2.56 4.2%
 Health & Beauty                      £3.65 £3.65 0.0%
 Non Food                                £2.07 £2.08 0.2%
 TOTAL  £2.85 £3.02 5.6%
 Sainsbury’s.com  Sainsbury’s Local % Diff 
 Ambient  £1.31 £1.41 7.1%
 BWS £4.39 £4.79 8.3%
Chilled  £1.69 £1.81 6.6%
 Frozen  £4.00 £4.40 9.1%
 Health & Beauty £3.83 £4.10 6.6%
 Non Food £1.60 £1.79 10.8%
 TOTAL £1.81 £1.95 7.3%

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