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Another challenging year for the UK economy is nearing an end and it’s been one in which even the food and grocery sector has started to feel the pinch.
In spite of the challenges however, the convenience sector remains ahead of the game and operators are looking forward with a remarkable sense of buoyancy.
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More and more shoppers are watching the pennies, but 'convenience' could be a safe bet |
Money’s too tight to mention
As the effects of austerity begin to take hold and Eurozone leaders fail to find a meaningful solution to the debt issues of some member states, shopper confidence in the UK continues to be a concern in the wider economy, with purchases being delayed, offset or simply not made at all.
Even in the grocery sector, there are signs of uncertainty, as IGD’s ShopperVista research has shown; 29% of people believe food prices will get ‘much more expensive’ in the next twelve months compared to 19% who felt this way a year ago. Little wonder then the percentage of shoppers telling us saving money will be a greater focus for them in the coming year has also risen, from 26% to 38% since October last year.
Earlier in the year, our exclusive research found this state of mind was beginning to affect the way people shopped for their groceries. More than two thirds of shoppers told us they were sticking to a set budget when they went out for groceries and even that they were economising on food at the end of the month until payday.
While these trends are of concern in the longer term, one thing is for sure: they do tend to favour convenience retailing, and the sector is making the most of the opportunity to grow.
Onwards and upwards
To help with household budgeting, increasing numbers of shoppers are turning to the convenience sector and in the process following more of a ‘little and often’ approach to their grocery shopping. This, they feel, helps them to cut back on food waste as well as enabling them to reduce their car usage at a time when petrol prices keep on rising.
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| A 'little and often' approach to shopping is becoming more popular | |
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What we’ve seen as a result in the last twelve months is further growth ahead of the total UK grocery market, taking the value of the convenience sector to £33.6bn, up 4.6% on 2010. More than a fifth (21.4%) of all sales in the grocery sector now come through convenience stores and by 2016 that share is set to rise to close on 23%.
Of course, shopper demand alone is not enough to achieve these results and operators and suppliers across the sector have been working hard to deliver a better offer and a more appealing experience for shoppers.
The value message in c-stores is now much more consistent and coherent than it once was, with value leaflets, ‘wow’ deals and price comparison all common features from the sector’s leading operators. Added to this, fresh food penetration continues to grow and the sector is now a viable option for many when it comes to categories such as fruit and vegetables.
The shape of things to come
So that’s what the sector is doing well and there’s much to be optimistic about. That said, we’re unlikely to see a drastic turnaround in the health of the economy in the coming years - in fact, things could well get worse before they get better - so there’s no room for complacency. Everyone involved with the sector must stay closer than ever to shoppers and their needs, and be sure to deliver against these without exception in-store.
The good news is the seeds of tomorrow’s market are already with us however, so the opportunity to integrate them in to your convenience strategy is very real indeed.
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The trickle of online innovation from convenience operators is gradually becoming a flow |
For one thing, the health agenda isn’t going to recede and shouldn’t be seen as someone else’s concern. Government is committed to dealing with our nation’s growing health problems. Convenience stores already have a role to play in shaping diets and eating habits and as their share of spend increases, so too does their influence. Initiatives such as Change4Life, Healthy Start and the Responsibility Deal on Public Health should be viewed as the framework around which revised approaches to salt, sugar and saturated fat content can be built, and not only with large formats stores in mind.
Another theme that’s already with us but yet to realise its full potential, is online and digital engagement. The trickle of innovation within convenience stores is gradually becoming a flow with great examples coming from businesses such as The Co-operative Group (proximity marketing and on-pack QR codes), Budgens retailers Andrew Thornton and Guy Warner (online magazines and personalised discount vouchers) as well as symbol group Nisa (Twitter engagement).
What businesses must now seek to do is take the step from trial and tactical positioning to embedding digital development within their long-term strategy for the sector. We now see a much more coherent approach to online within the major multiples and many of the biggest FMCG suppliers, but with change coming so fast in this area, others should be wary not to miss the boat and be left behind by their customers.
More information:
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The Symbol Summit 2012 |
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22-23 May |
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IGD's first ever Symbol Summit offers suppliers an unrivalled opportunity to hear from five of the UK’s biggest symbol group operators - key players in the convenience sector. Learn how to engage with them and their retailers, find out how to drive your sales, and network with key customer contacts. |
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Convenience Retailing 2011: Forces Behind a Changing Landscape |
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IGD’s annual convenience research is a comprehensive and extensive guide to the UK convenience sector and global innovation. Please call +44 (0) 1923 851954 or email nick.downing@igd.com if you'd like to access it. |
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