Research shows convenience stores must evolve to survive

Two sets of retail analysis have been published that show the evolution of food shopping – and how retailers must adapt in response to survive. Retail industry think tank...

Two sets of retail analysis have been published that show the evolution of food shopping – and how retailers must adapt in response to survive.

Retail industry think tank IGD reports that despite convenience stores targeting the ‘little and often’ shopper, they are failing customers with problems over layout.

Michael Freedman, senior shopper insight manager at IGD, said: “Even though more people actually visit a convenience store for their top-up shopping, they tend to be more satisfied when they go to a supermarket or food discounter for this mission.”

[Image: IGD/Michael Freedman]
[Image: IGD/Michael Freedman]
The figures showed 80% of people shopping at a discounter or larger supermarket were left “extremely satisfied” or “very satisfied” with their last top-up shop. However convenience stores scored just 71%, co-operatives got 63%, and symbol stores (independent retailers part of a larger organisation, eg Spar) scored 60%.

Few shoppers find it easy to locate the aisle they need in a convenience store

This was blamed, in part, on the layout of products within the stores. In food discounters, 82% of shoppers said it was easy to find the right aisle, compared with 78% in supermarkets and 71% in multiple convenience stores. The figure for symbol stores was 69% and for co-operatives 66%.

“The convenience channel, largely made up of stores under 3,000sq ft, should in theory be at an advantage in helping shoppers to complete their top-up shops as quickly as possible,” said Mr Freedman.

“However, the store layout of many convenience stores does not appear to help shoppers. Few shoppers find it easy to locate the aisle they need in a convenience store when they are conducting a top-up shop.”

[Image: IGD/Michael Freedman]
[Image: IGD/Michael Freedman]
Mr Freedman also stressed how important saving customers’ time was becoming to increasing performance, saying convenience stores “will build loyalty by offering shoppers convenient and effortless ways to get the products, meals and food-to-go options they want, in the shortest time possible.”

Collect online purchases from Co-op Food stores thanks to new deal

This all should give the Co-op Group food for thought. In the wake of the recent annual report, Steve Murrells, chief of retail for food, said the Group would continue to focus on the convenience market and look to open another 100 stores this year.

The Group also confirmed it would continue to close larger stores in favour of smaller convenience supermarkets, a tactic that helped Co-op Food’s latest sales figures reach their highest level since 2011.

Mobile payment is predicted to outstrip cash and card by 2025
Mobile payment is predicted to outstrip cash and card by 2025

Another changing environment is payment. Research from the Group, published in The Way We Pay report, suggests that by 2025, 65% of all transactions will be done by mobile phone. At the moment, 65% of transactions are still in cash, but the use of contactless payment has trebled in a year – reaching 11 million transactions in one month. More banks are issuing the technology on their cards, and Apple Pay is now well-established.

Cheryl Marshall, retail chief information officer at Co-op Food, said: “We’ve seen incredible growth in contactless and it is the payment medium of tomorrow, although mobiles are ringing the changes.

“The new technology is perfect for convenience stores as shoppers buy fewer items and speed is important to them. Cash is still king as people enjoy carrying money, however we predict that by 2025 mobile payments will overtake cards and cash.”

The Group’s survey of 2000 shoppers showed some reluctance to use contactless payments for higher amounts, mostly down to trust issues over how much is safe to pay using the method.

The average basket spend for contactless in convenience stores is £8.66 compared with an average of £18.16 when using chip and pin.

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