The war in Ukraine, economic landscape recovery and rising fuel prices have presented difficulties in 2022 that the convenience market has not been exempt from. Looking to 2023, Lumina Intelligence sees a range of emerging trends and opportunities, as well as continued challenges for retailers to be mindful of.
Rising fuel prices has meant that consumers are increasingly citing proximity as the main driver to convenience stores. While convenience stores are unable to compete with supermarkets on price, the latter are frequently located out of town and require consumers to drive to them. This gives convenience stores an edge, as many are located within walking distance of residential areas. Convenience stores are further competing with supermarkets by diversifying offerings to include hot drinks, food to go, post offices and pharmacies.
Expansion of food to go offerings is a trend Lumina has seen growing across the market in 2022 and is likely to continue into the next year. A further growing trend within convenience is incorporating internet trends into propositions. Hazel Ridge, winner of the Convenience Awards Rising Star award, launched a dessert bar in her Londis store in Weymouth. The dessert bar sells goods that are trending on Tik Tok, tapping into the Gen Z market. Baked goods will boost footfall when placed in key locations and have a high profit margin, making them an effective way to drive sales in 2023.
The cost-of-living crisis has caused many consumers to trade out of convenience, with discounter shopping increasing. In the summer months of 2022 discounter shopping peaked as consumer confidence fell but both have since began to slow. Alongside this, consumers are increasingly looking for products they feel offer good quality for the price. Brand remains important to convenience shoppers, ranking as the most important purchase factor in the fourth quarter of 2022.
Despite some improvements in consumer confidence, financial difficulties remain, resulting in consumers trading out of out of home occasions, visiting restaurants less. This presents an opportunity for the convenience market, as there is a demand for ways to replicate these experiences at home, at a fraction of the cost. ‘Treat’ and ‘Meal for Tonight’ occasions have grown across the market in the past year, demonstrating a gap in the market for premium meal deal options. An effective example of an operator tapping into this occasion is Tesco, offering a £12 Tesco Finest Dinner for two, consisting of a main, side, dessert and alcoholic drink. This premium offer enables consumers to replace the dining out experience at a fraction of the cost.
There is an opportunity for omnichannel in 2023 as consumers seek the quality of foodservice without the price tag. Two thirds of consumers stated that they had bought a restaurant branded product within the last three months. Brands have been launching signature products, such as Itsu gyozas, Pret A Manger croissants and Nando’s perinaise, enabling consumers to recreate restaurant experiences at home. These products often have a price premium, yet consumers perceive foodservice branded products as better quality and worthy of a higher price. Omnichannel products offer high sales and can align with growing ‘Meal for Tonight’ occasions, making them a good option for convenience retailers to partner with.
Looking towards the year ahead, the convenience market should seek to continue to capitalise on the convenient nature of stores, something larger supermarkets often cannot compete with. Expanding offerings and aligning stock with consumer trends as well as tapping into consumers moving away from other channels are key opportunities giving more reasons to visit convenience stores in 2023.
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