It has been easy for businesses to lose sight of the bigger picture and the longer-term opportunities over the last two years. COVID-19 has been both a disruptor and accelerator of the trends we see shaping the industry, revealing opportunities as well as challenges within a single channel such as convenience. As we enter a new year, we look at how these trends are shaping the channel’s route to market in a post-COVID world.
Delivery is such an important capability in the route to market. It is about having an effective and efficient supply chain for product to reach independent retailers – but much more than that, it is also the key platform for raising the standards and driving improvement in retail execution. Combined with the retail support functions and format development of a symbol offer, it’s what has been transforming the competitive capabilities of independent retailing in the UK.
Cash and carry also has a significant role to play in the route to market and remains an attractive option for some retailers. But for any retailer managing one or more stores above 1,500 sq ft, delivery is a critical service to maintaining an effective professional operation. Coupled with electronic ordering systems, it is the critical link that brings suppliers closer to retailers offering data and visibility to help shape more effective sales strategies.
Following the boost that the pandemic has given to local shopping, the support and discipline of delivery and symbol group packages are now more important than ever if independent retailers are going to keep, and capitalize further on, this opportunity.
Among the trends we’ll be keeping a close eye on in 2022 is the increasing deployment of checkout free technology; with the arrival of the Amazon Fresh format in 2021 being seen as the benchmark for a rapid, frictionless shopper experience.
Alongside the technology, what has also struck us about the Amazon Fresh stores is the well thought out layout and ranging of the format – showing that the business really does mean business as a player in the convenience sector.
Another key development we’ll be tracking closely going forward is the growth of rapid delivery services, following the surge in convenience home-shopping during the pandemic and now, the proliferation of specialist operators such as Getir, Gorillas and Go Puff in 2021.
There’s no doubt that the main opportunity for these specialists lies in the impulse mission traditionally catered for by convenience stores. It’s also clear that shopper demand for delivery remains high, with shoppers valuing the service increasingly alongside price and choice as a driver of their shopping decisions.
We can certainly see the potential for these new entrants to take share from the traditional store-based retailers, but the opportunity in the market is perhaps at least as accessible to convenience retailers themselves as those delivery specialists. Indeed, we have already seen retailers driving significant incremental sales by using ready-made third party ordering platforms such as Snappy Shopper.
While not all retailers are prepared to commit to operating such a delivery service, the increasing numbers that do are finding sales boosted by an average of over £2,000 a week, driven by transactions that are typically twice the size of in-store purchasing.
Moreover, while it seems clear that the competition from specialist operators will be most conspicuous in metropolitan catchments, convenience retailers will face much less sustainable competition in more suburban and provincial locations, leaving local retailers with a far less congested field to go after.
Find out what the future of convenience looks like and hear from the experts leading the way at the Co-op Trade Briefing from IGD; 29 September 2022; Manchester Central. Book tickets now