Using technology to drive convenience retail growth

Date : 14 October 2010
Using technology to drive convenience retail growth

Growth in the convenience sector is, in part, the result of the changes in consumers' lifestyles and, as a result, capturing this growth  requires an innovative and responsive approach from operators.

Here, we explore some of the ways in which retailers are capitalising on developments in technology and services in order to adapt to the evolving needs of their customers and deliver a more appealing shopping experience.

Winds of change

IGD’s ShopperVista  tracks shopper behaviour and shows that a variety of social and economic factors are altering the way people shop for food in the UK. Greater cultural diversity, smaller households and longer working hours all have a role to play, and the convenience sector is, in many cases, on the front line of innovations designed to give customers greater flexibility in the way they shop.

Open all hoursSPAR store front showing its longer opening hours

One of the convenience sector’s major attributes lies in its ability to serve customers at a time that suits them. Staying open for longer will become increasingly appealing to shoppers, a substantial proportion of whom in the UK are now working more hours than ever before. IGD’s Convenience Retailing report 2010 shows that stores in the sector are extending their opening hours in response to customer demand.

Last year, the average convenience store traded for 113.3 hours over a seven day period, compared to 110 hours in the previous year. Although the extension of opening hours is dependant upon several things, such as store location and cost, stores that can adapt in this way will find they are better placed to satisfy shopper needs in the future.

Smartphone, smart move

The trickle of retailers exploring the world of mobile phone technology is quickly becoming a torrent and smartphone applications are now seen as a huge opportunity for many retailers to drive revenue in the future. In Europe, operators such as 7 Eleven and Albert Heijn were among the first movers with this type of technology, launching advanced store finders and tools designed for scanning barcodes and compiling shopping lists.

In the UK, Tesco, Sainsbury’s and Waitrose have all been active in the mobile technology market in 2010 and The Co-operative Group too has  brought out an application that allows shoppers to verify food provenance by checking where their food has been grown. Without doubt this trend will  continue and the convenience sector certainly appears ready to benefit as smartphone ownership increases and wireless technology becomes more widespread.

Self-scan: the DIY checkout

Self scan machine at Tesco, where 25% of all UK transactions happen

Convenience store operators are eager to minimise transaction times and increase customer flow and self-scan checkouts are a vital tool in achieving both of these goals. Typically highest among convenience multiples, penetration of self-scan in the sector varies considerably, but is nevertheless on the increase. IGD’s Convenience Retailing report 2010 has identified that 2.9% of all convenience outlets feature at least one self-scan checkout.

Tesco data meanwhile indicates that some 25% of all its UK transactions are carried out through self-scan checkouts with the technology being a prominent aspect of its Express stores in particular. Indeed, 2009 saw the company opening its first self-scan only convenience store in Kingsley, Northampton. The growth of the major multiples within the convenience sector will doubtless be a key factor in the development of self-scan, but the drive for greater efficiencies in store will also play a major role.

Convenience on your doorstep

The convenience sector does, by its very nature, seek to offer solutions that are local and easy to reach, but as competition in the sector intensifies, some convenience operators are looking at home delivery services as a way to further differentiate themselves from the competition. AF Blakemore (Tates) for example offers a free drop-off service to shoppers at its SPAR Broomhill store on all transactions over £25.

Others, such as Thornton’s Budgens Crouch End, are trialling similar services in order to make their offer more flexible and accommodating for local shoppers. The Co-operative is now combining home delivery with the latest technology as it rolls-out digital touch screen kiosks that enable consumers to quickly and efficiently select a delivery time in store as they do their shopping.

What does this mean for you?

A fast evolving environment and intense competition mean operators, and their suppliers, must remain vigilant about market trends and quick to identify opportunities to work together on new technology and services that can bring substantial returns. In support of a solid core offer, such initiatives can create the point of difference needed to win in local markets - staying close to the shopper is more relevant now than ever before. Understand your retail customers’ approach to the convenience sector and look for ways that your business can support them to make their proposition more flexible, efficient and appealing to their target audience.