By showing customers that there’s more to your store than just bread and milk, you can turn encourage bigger and more frequent top-up shops.
Top-up shopping is where it’s at in convenience. It’s a massive mission - the number one in fact - currently worth more than £16bn, and HIM Research & Consulting expects it to reach nearly £20bn by 2020. Put into numbers that are easier to imagine, 44p in every £1 spent in c-stores is on top-up shopping.
“The phenomenal growth in shoppers trusting convenience stores for their top-up shopping is driven by a number of factors. Firstly the growth of the ‘planned’ top-up shop, rather than the ‘distress’ top-up shop,” says HIM’s research director Blake Gladman. “Convenience stores have always been the first choice for the ‘distress - I’ve run out and need it now’ shopper but gaining credibility for this ‘planned’ top up shop is what is driving larger basket shops to c-stores. Shoppers are seeing c-stores as less of a necessity in a distress situation and are more likely to actively seek them out to appease their everyday needs. This comfort with c-stores comes from higher satisfaction across needs like availability, ease of shop, product quality and price perception.”
Milk and bread are the top two top-up items bought in symbol and supermarket c-stores. Interestingly, after those items the top-up lines bought in the different types of stores vary, with HIM’s figures revealing how symbol c-stores hark back to their CTN roots. For example, tobacco products are the number three top-up items bought in symbol stores but are way down the list at number 10 in c-stores owned by the mults. Meanwhile fresh fruit and veg is at number three on the top-up list in multiple c-stores, but at number 10 in the symbols.
Pricing strategies for key top-up items such as milk also vary from store to store. Barrie Seymour of Londis Littletown in West Yorkshire claims that most of his milk customers are on a distress top-up mission. For this reason, he says dropping the price to a round pound would fail to attract additional custom. “With milk it’s very much a distress purchase. We sell it at 2l for £1.59 or ‘2 for £2.50’. We did drop it to £1 once and sold no more,” he adds.
“I’m up against one of the best milkmen in the country, who still has a big operation doing doorstep deliveries, and our milk still sells well. If we did it at £2 for two litres then customers would say no thanks, but at the price we sell it it’s fine and we still have an offer if people want that. I think the £1 price point devalues the product too much.”
However, other retailers cut the price of key items, such as milk, in order to beat local competitors and attract more planned top-up shoppers to their stores. Retailers like Exeter-based Clive Sheppard, director of Spar chain the Chartman Group, keep a number of essential lines, such as 2l milk, eggs and bread for £1. “With the changing buying habits, there’s a fantastic opportunity to get customers coming back again,” says Clive. “I’d prefer to take less margins on those items as they’re the staples that people are more likely to notice.”
Conrad Davies, who owns four Spar stores in north Wales, also draws customers by selling his basic top-up items at eye-catching prices. “At the moment we have milk at £1.19 in one of our stores, and £1.25 in another but there’s an offer there at ‘2 for £2’. With bread when it’s not on at £1, it’s often ‘2 for £1.50’.”
Whichever pricing strategy you adopt for your essential top-up items, once they are in the store, you need to get the most out of top-up shoppers by encouraging incremental sales. “Regardless of whether they have come in on a distress mission to buy a pint of milk or a planned visit to pick up a few keenly priced basic items, the key to making the most of top-up shoppers is to up-weigh their baskets by inspiring them to pick up additional products once they are in-store,” says Gladman.
Once shoppers have entered your store, you have the chance to show them that there’s more to your offer than just bread and milk, and hopefully encourage them to buy more items and visit more often.
One store that’s doing particularly well with top-up shoppers is the new concept Budgens store in Crouch End, North London. A ‘before and after’ survey of 300 shoppers at the company-owned store showed it had seen a huge surge in top-up shoppers, with the number of items purchased per visit nearly doubling from five to nine, and the average visit frequency increasing to three times a week. According to the research, 98% of shoppers surveyed think the Crouch End store is great for top-up shopping (up 6% since the refit).
“We’ve added loads more chillers, a coffee grinder with six different types of coffee beans, a salad bar and soup and porridge stations,” says fresh foods manager Abdul Sultan. “We’ve also extended the deli counter with more lines of cheeses, olives and pies.”
As a result, customers who came in for the basic essentials are coming out with far more than they originally planned. “They tell me at the tills: ‘I was only coming in for one thing and then I found this and this and this!’” he exclaims. “People come in much more regularly than they used to and they are spending much more - around £20 per shop.”
But it isn’t just newly-refitted all-singing, all-dancing stores that can cash in on top-up shoppers. HIM reckons the way to increasing top-up shoppers’ spend is to ensure first and foremost the range is relevant to your target shoppers and that it’s credible and appealing. “One of the simplest ways to do this is to ensure the chilled display in store is clean and tidy,” says Gladman. “When we asked shoppers to rank the most important factors when delivering a credible fresh range - clean and tidy came out top, followed by a good selection of the basics. So it’s about getting the basic range right and relevant and ensuring that it looks appealing to shoppers.”
Simple merchandising techniques can also be hugely effective in boosting basket spend. Gladman says the more progressive retailers have realised that investing in fresh and chilled displays is key to driving additional purchases. “Through clever signage and shelving (think clean, white fixtures and bright displays evoking a deli or similar feel) retailers are able to promote the quality and ‘premiumise’ the category through look and feel rather than primarily the products themselves.”
Dean Holborn, who has two stores in Surrey, agrees. “What HIM has said is basically what we have done in our Redhill store, and our customers love it. They comment on the new look, the new feel and the new colours.”
Dean says that as most c-stores basically sell the same products, it’s important that the store itself looks good. “Top-up shopping is first and foremost about range and availability but if you can make the shopping environment look more special that really helps. Our Country Choice range is selling well and that’s because we’ve dressed the fixture differently. We’re selling exactly the same croissants and pain au chocolat as other stores but ours are presented in wooden boxes with the Holborn’s logo printed on them. We then had a carpenter make the units to hold the boxes. It’s obviously a bit bespoke but it’s certainly made a big difference to us.”
Clive also uses little touches to give his Magdalen Road store a more rural feel. “We have fruit and veg offers on an A-board blackboard outside the front of the shop,” he says. “People want to go to a nice store, so we’ve invested in our store to make it look the part.” The fresh and chilled sections are key focal points with staff focusing heavily on creating premium, vibrant displays using green wooden crates.
Mike Walker, business unit director at Arla Foods, adds that promotions are crucial to encouraging top-up shoppers to make impulse purchases. “Link deals on key categories such as milk and bread present a huge opportunity to drive incremental sales. Often shoppers on top-up missions will end up visiting the entire store meaning that there are opportunities to drive impulse purchases.”
It’s easy to complain that customers are only coming in for one item and then leaving, but they may well be encouraged to buy more if you take the time to spruce up the place and convince people that you have a quality offering.
Figuring it out
There were 2.4 billion top-up trips to c-stores in 2014, up 640 million year-on-year
Top-up ‘planned’ shoppers visit more frequently (4.1 times a week versus 3.8 times for distress top-ups); have more items in their baskets (4.5 versus 2.7) and spend more (£8.73 versus £5.33).
The people doing the most top-up shops are singletons and couples with young children who do plenty of both planned and distress top-up missions
Retired ‘greys’ are more likely to do a distress top-up shop than a planned one
Students and the ‘young, free and singles’ are least likely to do any top-up shopping
Surges in sales of ambient grocery and fresh fruit and veg are driving top-up growth.
Source: HIM CTP 2015
Marketing your store to increase planned top-ups
Even before top-up shoppers set foot in your store, there are various ways to remind them where you are and what you do.
According to HIM Research & Consulting, just 20% of shoppers receive a leaflet from their local store but 62% of those that do are then encouraged to head to the shop. You might take it for granted that local people know where you are and what you do, but new residents are moving into neighbourhoods all the time and many would be glad to know what’s on their doorstep.
Then there’s online activity. Sometimes on Facebook or Twitter it seems to be all about what’s new but social media, like leaflets, is a good way to remind people what you do, that you have everything for their everyday needs.
HIM also recommends making use of your front-of-store signage to highlight your role in the top-up shop routine.