Over the last twelve months convenience store operators around the world have been forming new partnerships with suppliers and building innovative joint-ventures that have led to new c-store hybrids appearing in towns and cities worldwide.

Here, we explore some of the latest developments and look at the underlying trends fuelling change in the channel right now.
 

Convenience boundaries are converging

Traditional convenience models are converging. Evolving consumer trends and more open partnerships between different retailers have stimulated a breakdown of traditional c-store retailing as we know it.

At the same time other retailers are identifying new ways to capitalise on the growth opportunities offered by the convenience sector. Discounters, non-food and health & beauty retailers remain particularly active in this area, beginning to adopt certain elements of convenience store propositions.
 

Capturing the forecourt

International grocery retailers have continued to make strong headway in the forecourt sector. Retailers like S Group (Finland), Migros (Switzerland) and Pick n Pay (South Africa) have all looked to further segment their convenience store portfolios by acquiring existing forecourt sites or forming new alliances with fuel retailers like BP, Esso, Shell or Total.

An ABC Deli at a Finnish forecourt		Source: IGD Retail Analysis

The latter has played a pivotal role in the development of new c-store concepts in recent months as grocery retailers look to work in tandem with forecourt operators, sharing best practice, market insight and supply chain efficiencies. This has offered a platform for large scale grocery store operators to target forecourt-driven shopper missions, and enabled some of them to fill the gaps in their product range by leveraging brands from established forecourt operators.

Opportunities in this part of the channel are opening up in the Far East, with several forecourt operators in China breaking new ground by forming joint ventures with fast food outlets in a bid to increase footfall. PetroChina for example has recently partnered with McDonald's to open restaurants on the same sites as its filling stations. This has since sparked a reaction among the rest of the Chinese c-store sector.
 

A Chez Jean outlet we visited on a recent trip to France

Innovation beyond the forecourt

Another area which has seen significant development is the roadside restaurant sector. Last month for example, Norwegian roadside restaurant operator Marché and a local supermarket player called Bunnpris opened the first restaurant with adjacent supermarket in the town of Drammen, close to Oslo. The development is the first of its kind for the Norwegian market.

The joint venture between French-based grocery operator Casino and coffee chain Relay is another partnership that has caught our eye. It has since led to the development of a new newsagents, café and grocery-style hybrid called Chez Jean – one of IGD’s ‘Ten to Watch’ retailers for 2009.
 

Private label developments

Private label is becoming embedded more strongly in the global convenience landscape as c-store operators and suppliers work to deliver a more affordable experience for customers in times of greater household budgetary pressures. In November 2008, for example, c-store giant 7-Eleven Inc. announced plans to extend its core ‘7 Select’ private label range. The range is said to offer savings of between 10% and 20%, with plans in the pipeline to have 180 private label products by the end of the first quarter 2009.
 

Get ready for more innovation in convenience

Suppliers must prepare themselves for more innovation in the convenience store sector in the future, fuelled by greater competition outside the channel and the desire from larger scale grocery operators to get more deeply involved.

This will create new opportunities for suppliers who already have a strong presence in larger store segments as retailers look to target new customer bases.
 

More information:

	The Evolution of Convenience Retailing
	Want to know more about how to unlock the opportunities in the convenience sector going forward, both in the UK and internationally? IGD’s forthcoming report, The Evolution of Convenience Retailing, provides a strategic overview of the UK convenience market, global perspectives and best practice.

	Convenience Seminar 2009	14 May 2009
	IGD's Convenience Seminar 2009 is a must-attend for anyone involved in the convenience sector. Hear the latest findings from the Convenience Tracking Programme (CTP), understand the latest store numbers & market value changes, hear convenience shopper research findings from him!, and discuss how the convenience sector is changing.

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Jamie Trust is a Business Analyst in IGD's Market Intelligence unit, chiefly responsible for coverage of the US market. As well as coordinating IGD’s research on the European private label market, Jamie has co-authored the report Global Retailing: Preparing for Change.

In the last year he has travelled to the USA, Netherlands, Sweden, Denmark and the Baltic States, and continues to play an active role in the ongoing development of Retail Analysis, IGD’s online subscription service.