2017 was a year of unprecedented change in the convenience channel, and we at Nielsen estimate growth for the sector of around 1.5% in 2018, driven by fresh food and food to go offerings.
From a shopper perspective, the shifts in the convenience retail structure should bring about a positive change for the U.K. shopper. We expect lifestyle, the “little and often” trend, technology and location to be four of the key influencers on shopper’s behaviour in 2018, which, if executed well, will be true foot traffic drivers for c-store retailers.
The time poor, digitally connected younger generation is driving the trend for increased visits to convenience stores. These smaller households are focused on shopping for what they need over the next couple of days, and they’re heading to smaller stores to get it.
Health and wellbeing remain a key focus for the average U.K. shopper. The increased availability of fresh and healthy products in convenience has changed significantly over the last two years, and c-store retailers have continued to invest in refrigeration to meet growing consumer demand—but there is still significant room for growth in this area.
C-stores also play an important role in the quest for providing busy shoppers with something that holds real value: time. The growth of online shopping, which accounts for over 6% of total fast-moving consumer goods (FMCG) sales in the U.K., and the trend toward click and collect is well documented. The possibility for a retailer/wholesaler with an already established supply chain to tag on a click and collect option into a local neighbourhood convenience store while delivering the stores stock for the day, would surely be an attractive scenario both for the retailer, from a footfall perspective, and the shopper, who is always on the lookout for ways to shop more flexibly.
Little and Often
The increase in shoppers looking for meals for the next-three-days is growing: 55% of shoppers claim to visit a convenience store for a top-up mission, 11% for a meal prep mission and 17% for food-to-go.
Driving frequency of visits and encouraging more small basket purchases is likely to be a key driver of growth for retailers in the first half of 2018; and with 77% of shoppers actively look for a promotion, this could be one way for convenience retailers to help encourage one extra item in the basket behaviours.
The use of off-shelf space for driving incremental purchases has been particularly useful for healthier snacking categories. A recent Nielsen Scantrack analysis showed that categories like pretzels, crackers and bread snacks delivered higher incremental returns than confectionary and soft drinks. So using this critical off-shelf space in store for categories that meet an important and growing shopping need will help to encourage bigger basket sizes.
But why not go one step further, and use the off-shelf space flexibly according to the specific day of the week? A Nielsen HomeScan analysis has identified that spend per lifestage differs on a weekday to a weekend, so understanding which of your shoppers shop at different times of the week, and flexing your promotions and off-shelf space accordingly, will yield the best results.
Retailers that are looking to entice shoppers with quick and speedy service will be utilising technology to attract new shoppers and enhance the existing shopper experience.
Shoppers are already using technology to do their shopping, so they will soon want to shop in their local convenience stores in the same way.
Contactless payments, self-checkouts, cash machines and mobile payments all help on the journey to encourage your shoppers to shop easily and to buy little and often. The use of digital screens as a future medium to communicate key messages to your local shopper, is potentially another way in which retailers can use technology to encourage that extra one item into every basket.
While the use of digital shelf edge labels seems a far cry for a small convenience retailer right now, they will surely be a key component of a store’s tool kit in five years’ time. Providing alerts for low stock, allowing retailers to change prices at the shelf in real time and saving on increasingly expensive labour costs.
Location, location, location. A Nielsen Shopper Trends report indicates that 38% of U.K. shoppers visit a new convenience store as they pass them. And convenient location is one of the top three reasons for choosing a convenience store. Having a store in a good, accessible location with convenient parking and good transport links is crucial for capitalising on the important food-to-go category, and enables time-poor shoppers to quickly stop in on the way home from work for their groceries.
Focusing on shoppers’ needs with regard to location, little and often shopping, and being nimble with the speed of change, flexing ranges to suit shopper needs and missions are strategies that convenience retailers should adopt. Space limitations aside, there are many opportunities to make small changes to help remain relevant to your shoppers (while remaining profitable).
This article originally appeared on conveniencestore.co.uk.
- Nielsen Pinsight, YTD to Dec. 2, 2017 (online sales)
- The Association of Convenience Stores – Local shop report
- Nielsen Shopper Trends report, 2017
- Office National Statistics
- Nielsen U.K. Consumer Confidence Q3 2017
- Nielsen Total Till 2017
- The Rise and the Rise Again of Private Label, February 2018