Brand new research from HIM’s 2014 Convenience Tracking Programme (CTP) has revealed a rosy future for convenience stores, provided that they take advantage of the plethora of opportunities to grow their baskets.
While competition from discounters, supermarkets and online offerings is all around, local shops are set to survive and thrive thanks to a number of factors, claims HIM. “We predict the ‘local’ shop demand will be sustained and spurred on by the ageing population. This is the largest shopping group in convenience and in the strongest estimated growth,” says insights manager Jennifer Pratt. “The UK’s longer working hours will also contribute to the sector’s success, particularly with women working longer days, as 56% of c-store shoppers are female.”
The company maintains that because consumers are time-poor, the convenience format is especially relevant. However, you can’t wait for customers to come to you, because of the large and growing number of outlets now offering convenience products.
The amount consumers are spending overall, shopping frequency, and basket size have all remained fairly flat within convenience at an average level. But HIM research shows that if you drill in to specific categories, then it becomes apparent that some encourage a higher spend than others. For example, the average convenience store basket spend is £6.13. But while shoppers who buy hot drinks to go, soft drinks, lottery items, confectionery, milk and sandwiches tend to spend under £10, those who purchase cheese, wine, spirits, household goods, frozen, ambient and pet care products tend to spend over £10.
In the same way, the average shopper visits a c-store 3.7 times a week, but dig deeper and it is clear that certain groups have a higher frequency. For example, elderly shoppers visit 4.2 times a week, and Scottish shoppers actually visit 4.4 times a week.
The research showed that 14% of shoppers come away with a basket of five items or more, which is a 3% increase on last year. However, this has been driven by the supermarket convenience outlets, rather than symbols and independents, claims Pratt, adding: “Now it’s time for symbols to chase shops that are over-achieving.”
She explains that there are numerous ways in which retailers can look to grow basket size and spend. “We estimate that 27 million people use c-stores a year. If everyone bought one more item the size of the prize would be £59.5m.”
So what can retailers do to ensure that they get a piece of the pie? By honing in on specific shopper missions, it is clear to see that demand is growing for particular occasions. While there are 5% fewer shoppers taking part in the ‘newsagent’ mission, there are 5% more embarking on the ‘food to go’ mission, and 1% more taking part in the ‘meal for tonight’ mission. While top-up remains the highest value mission, worth a whopping £12.3bn, food to go and meal for tonight are winners in terms of growth, with the former up 4% to £5.2bn, and the latter up 4% to £3.5bn. Almost a third (29%) of c-store shoppers still only buy one item, but by tapping into growing shopper missions, retailers can encourage shoppers to put more items in their baskets, claims HIM.
Focusing on product pairings is another smart way to bump up your basket. According to HIM, items commonly bought on their own include: hot drinks to go, cigarettes, newspapers, lottery and licensed. “Retailers need to think of logical link-ups with these products and how shoppers’ needs change throughout the day,” says Pratt. For example, hot coffee to go and a croissant may be popular in the morning as a quick breakfast, while later in the day, it may be more effective to push coffee with a doughnut as an afternoon pick-me-up. In the same way, newspapers could be linked to a sandwich deal for the lunchtime rush, or sharing confectionery for a night in.
Working the till area harder can also help to increase sales. “Till point space is really not being maximised,” suggests Pratt. “Retailers need to think about where the shoppers are going in-store and where the impulse hot spots are. As many as 18% of customers only go to the till, so retailers need to think harder about what products they choose to locate there.”
The firm’s research showed that the most impulsive categories within convenience are confectionery, crisps and snacks, and soft drinks. Therefore, one option is to simply display more of these impulsive items at the till point. “We need to see more chillers in the till point, such as the in-built soft drinks chiller in the counter at Paul and Pinda Cheema’s Malcolm’s Kwiksave store in Chelmsley Wood,” she adds.
Till point communication can also be used to encourage additional purchases of impulse items. A simple sign prompting people to pick up an item within a particularly impulsive category can be very effective. For example, a poster highlighting a food to go snack could tempt shoppers to pick up a bap if they are feeling peckish.
Placing impulse items at the queuing system can also help to grow shoppers’ baskets. This can be witnessed in the forecourt sector, which currently has the highest conversion rate - almost one-third of forecourt shoppers buy because they see something in the queue, notes Pratt.
If you really want to get shoppers spending, then a substantial fresh produce offering is crucial. “The key difference between a medium basket and a large basket is fresh fruit & veg and meat and fish, as 40% of larger baskets contain these categories,” she points out.
Symbol stores’ fresh offer has improved, but more needs to be done or shoppers will continue going to discounters, supermarkets and online, she notes. “Fruit & veg is the first step to buying consumers’ trust in your brand, and this is a step towards getting them to buy into meat and fish.”
So by investing in fresh produce, tapping in to shopper missions, creating smart product pairings and maximising till point opportunities, you can not only survive these challenging times, but increase customer loyalty and spend. And with the competition growing stronger by the day, there’s no time like the present to see what changes you can make to ensure your shoppers’ baskets are bulging.
A new dynamic
The changing face of research in the convenience industry
As shoppers’ needs and behaviour changes, a new approach to research is required in order to capture these dynamics acurately.
HIM executive director Jill Livesey (pictured left) says that by conducting research in frequent bursts, the company can evaluate both short-term trends and longer-term shifts in shopping patterns. “HIM will continue to cover the key questions - who is the shopper, by retailer, format, lifestage, demographic and geographic region etc - in order to provide an industry-wide ‘read’ of the channel, but our research is now updated regularly, so we are now able to capture and respond to spikes and stability in the market, and say whether this behaviour is likely to continue,” she explains.
As well as carrying out research on a regular basis, HIM uses a variety of methods to gain a true understanding of the market.
“We have online communities, retailer panels, and also some good old traditional methods such as focus groups - with shoppers and retailers - allowing us to dig around, debate and challenge,” says Livesey. “We also place a lot of focus on matching key shopper trends with the retailer’s view as, surprisingly, the views and opinions of retailers may be different to that of shoppers. So untapping this is the key to achieving better engagement for retailers and suppliers.”
And as a result, the company’s research is used by wholesalers, retail groups and manufacturers across the convenience industry.
“We are frequently asked: ‘how do I counteract my local competition?’, and that’s where we can help,” says commercial director Katie Hemmings (right). “For example, we saw an increase in the demand for food to go and meal occasions and we are really pleased that this insight is making a difference as retailers have invested in ranges, displays and value offers. This is bringing more shoppers into store and increasing their spend.
“At the same time, although the number of shoppers topping up in convenience continues to increase year on year, their spend is actually in decline, which is a slightly worrying trend for retailers,” she adds. “So understanding the reasons why shoppers may choose to go elsewhere is critical knowledge for any store owner.”