Cash-conscious shopping: The value in modern values

What’s the deal with today’s c-store customers? Just like you, shoppers are probably feeling the pinch. And after a couple of torrid years that have seen governments fall and inflation rise, they’d be forgiven for wondering what’s coming next.

So while the chat over the counter each morning may be positive, there’s evidence they’re putting the reins on spending in 2020.

Let’s start with the stats. According to figures from HIM, average spending per c-store trip has fallen 2% – making the average spend £6.38 in 2019 versus £6.50 in 2018.

Experienced retailers know there’s no need to panic (total visits are up in impulse). Yet it does mean that stores need to double-down on ensuring cash-conscious consumers feel they’re getting value for their everyday shop.

Over at the Thrifty’s c-store chain in Merseyside Navin Soni (better known to his regulars as Micky) believes that this lower-spending mood might be here to stay – for a couple of years at least.

“I think it feels like there’s a bit more consumer confidence around out there after Brexit,” he says. “And I also think that there was a lot of worry around before it actually happened – now shoppers are just busy getting on with it. However, many people realise there might be a downside, that jobs might be lost and things may get tough. So I think that shoppers are almost getting thrifty right now (if you’ll excuse the pun) while they’ve got the cash, before they’re forced to save money by something else.”

The sole focus on value is definitely setting tills ringing at his stores. He’s taken a tip from the discounters and gone in hard on price: buying huge volumes and keeping pricing easy-to-understand, as well as rock bottom.

“We offer prices that are cheaper than the promos at Nisa and we have them all year round,” he insists, “and we also do what we call ‘cut-throat prices’ just to keep the excitement up with customers. So we do things like have Mr Kipling Cakes at two for £1. They do really well and we find that people wait specially for them to appear. They travel up to 40 miles around to come in and stock up – we see people leave with baskets-full.

“We’ve even had other retailers and wholesalers come in and ask about them! Recently we had a promotion on Coke Energy and we had a retailer come around and ask if he could take a couple of pallets off us.”

Brands or own brands

Thrifty’s isn’t necessarily about the big brands (Micky prides himself on finding exclusive private label lines), yet his customers will jump when well-advertised names are offered on promo.

Elsewhere in the sector, retailers are saying that, in many cases, loyalty to the well-advertised brands drops when customers are feeling the pinch.

“There’s very little brand loyalty out there from customers at the minute,” says Harj Dhasee, owner of Nisa Village Stores in Mickleton, Gloucestershire. “I feel there’s been more of a move from brands to own-brand and value brands – and I think we’re becoming more deal-led in-store at the moment.”

Harj still thinks that it’s better to “give customers the final choice” on price. To protect margins, this means sticking to the ‘good, better, best’ retailing model (from own-brand to premium). This ensures the big brands are there for those who want them, while keeping own-label well-represented as well.

Harj says this works especially well in categories such as household. This is where he can offer a keen PMP for the big-hitters such as Flash, while also stocking the products where brand doesn’t matter.

“Sometimes black big bags are just black bin bags,” he shrugs.

“All anyone cares about on lines like that is the price. It’s the only thing customers are looking for.”

As the consumer mood changes is there a danger that brands might one day become a thing of the past?

The rise of Aldi and Lidl has got brands crying ‘copy-cat’ and eroding what makes them unique in the first place. Meanwhile, online price-finders and voucher codes mean customers can find simple ways to bypass paying full price on the names they like.

Micky reckons that it’s evidence of the dawn of a different shopping era, where shoppers aren’t embarrassed to be chasing good deals.

“I think that no-frills shopping is back in fashion again,” says Micky. “People aren’t ‘miraged’ by all the gimmicks and what’s happening with the big brands. Now they can look online at MySupermarket and find the cheapest deal going.”

On promotion

Elsewhere promos are still the major price mechanism that symbol groups use to get brands in front of consumers. They’re proved to attract custom, but there can be a catch-22, too, as products can do well on promotion, but then flop at a higher price.

Steve Browne, general manager of the Food Division at the Heart of England Co-operative Society, says that overall Co-op has become more strategic about deploying them in-store. This equates to stocking new products customers actually need rather than doing promo for promo’s sake.

“Right now we’re trying to be more efficient so we don’t get dead promotions or homeless promotions at the end of each period,” Browne says.

“You definitely don’t want products that just sit in the back or don’t have anywhere to go in the store until they come back onto promotion again. It just eats up your labour time – and that’s a major issue for many stores.”

Steve adds that the strategy includes taking some sites normally used for promos (such as end-of-aisle) for different products that shoppers might not expect to find in convenience.

“I think we’ve worked out a strategy that less is more,” he says. “So we’re focusing on the ‘good stuff’ and not just a raft of absolutely everything. That means not just offering stuff on promotion – but products that are of interest to customers. And it depends on the store. For one store it might be a healthy snacking range, in others it might be phone accessories, or gift cards.

“These [spaces in-store] historically would have been used for a promotion. We’re trying to grow our margin by other means.”

This pivot away from ‘deals at any cost’ might have legs across the sector. HIM suggests that today impulse rules as research shows that customers are spending even less time in-store (three minutes and 46 seconds in 2019 versus four minutes 18 seconds in 2018, HIM 2019).

When reviewing sector displays, it notes that only three in 10 of the most effective involved deals. It recommends thinking about conveying an “atmospheric message” through displays instead – as well as providing solutions for customer needs.

This might mean presenting alcohol and upmarket snacks together on rustic-effect wine boxes, or making more of the till area to offer complementary products.

Creating an atmospheric message and display is more powerful at engaging with a shopper who is typically in a ‘solution’ mind-set when in store and thus more driven by satisfying this need than by deals, claims HIM.

Stepping away from price concerns for a second, cash isn’t the only thing that consumers are conscious of. And that means smart c-store retailers can win big by offering customers other varieties of value, too. For example, Browne says that Heart of England Co-op is “playing hard on its membership offer”.

The scheme means members get rewards every time they shop, plus discounts tailored to their needs. There’s also a real sense of giving local communities something back. The Co-op’s Helping Hearts Awards Scheme actively helps charities and local groups across the region.

It’s a unique sweetener that makes casual c-store shoppers return customers. “Basically, our membership is a good way to give our loyal customers something back,” says Browne. “The discount they get can help customers during key times of year – like a Christmas party, a family birthday or whatever. We’re using it as our big selling tactic. It’s popular with customers and it’s what separates us from the rest of the convenience stores.”

Loyalty pays

If, as an independent, you feel you don’t have the same buying power, there are other ways to inspire loyalty and give customers those good feels. Aping the big chain coffee stores and rewarding regular customers with a free brew can be a smart start.

At Leanne Dixon’s Londis Yealmpton store customers get a gratis coffee for every 10 they buy via a card-stamp scheme.

“People like the fact that they’re getting something for nothing,” she says. “Coffee is something they get every day – and it’s another reason for them to buy it from our stores. It’s really popular.”

There’s also growing evidence from across the counter that customers support other ‘values’, too. C-store retailers have reported genuine consumer concern that brands don’t concentrate on cutting prices while their products cost the Earth elsewhere.

“One thing that often comes up with customers nowadays is sustainability,” says Harj. “At the moment, in areas like household, eco-conscious products are very much on-trend. So people are definitely asking for them and you want to include them in your offer,” he says.

“But customers still want sustainability at the right price. For instance, I was talking to a lady yesterday about switching plastic bottles for glass for our milk. Now that’s a good idea. But we worked out with the price increase it would cost an extra £500 or so a year for her household. The pressure is on to give customers both sustainability and value in the same products.”

Eco-conscious

Some big FMCG names are already responding, such as Colgate which launched Smile for Good last year – a new toothpaste in a recyclable tube. It was announced with a raft of discounting. Across the main supermarkets, Colgate upped its number of offers from 84 to 106 – a 26.2% increase (Promo Dynamic Brands 4 w/e 26 January 2020].

Plus, this eco-conscious attitude isn’t just about products and pricing – it includes waste too. The message is getting through that households are wasting money and natural resources on over-buying food.

Today UK households still waste 4.5m tonnes of food a year that could have been eaten, worth £14bn (Wrap 2020). Waste concerns have helped reduce space-stealing multi-buys and BOGOFs – or at least got shoppers thinking differently about them. “I think that customers are growing up a bit when it comes to multi-buys,” says Steve.

“I don’t think people like the waste that’s associated with them. But I also think shoppers are starting to plan their shops when they’re available, rather than just ignoring them altogether.”

Price. Sustainability. Waste. Today being cash-conscious means being aware of so much more than the bottom line.

And if retailers get a fair return on lines, they’re more than willing to do their bit for the planet and wider society. So now the race is on for manufacturers to offer products with a clear eco-benefit plus a price-point that satisfies price-savvy shoppers and doesn’t create waste at the same time.

Brands, it seems that the ball is in your court.