Innovation can continue to drive co-op and convenience retail

As convenience continues to forge ahead as the major growth area for grocery retailing, the challenge for retailers such as co-operatives is how to make the most of the trend and increase sales.

At the IGD Convenience Retailing Summit on 16 June, retail analysts looked at the ways in which innovation and innovative thinking can increase customer spend and keep convenience retailers ahead of the game.

Tim Billson, senior retail analyst at IGD, reported on how economic recovery was starting to appear, but for retailers “the road to recovery is slightly tougher than we envisioned at this time last year”. For six years between 2008 and 2014, the price of goods grew faster than wages, with that figure finally reversing in 2015.

Related: Research shows convenience stores must evolve to survive

Hyper- and supermarkets are showing stable growth, and convenience stores are performing well. Within the convenience sector, it is co-operatives which are taking the lead in growth. Co-ops had a 4.3% growth in 2015-16 and store numbers are also up 3.1% over the same period.

According to Mr Billson, convenience stores such as co-ops should be at the heart of the community and possess ‘the personal touch’. Stores should move quickly on opportunities to be more convenient for shoppers; offering parcel collection, payment of bills services, diversity of goods and product coverage. Current growth areas such as healthy eating and gluten-free products should also be an area of focus.

A Walmart-owned Seiyu store in Tokyo, said Mr Billson, has just opened and works using an effective and logical model. The ground floor operates as a convenience store while the upper floor is a warehouse for dealing with online orders. Another example of technology-led convenience is vending machines in France which stock fresh baguettes and meat products.

More from the summit: Co-operative retailers must drive ‘revolution in food’

Mr Billson urged co-ops and other convenience retailers to collaborate with fast-rising food services such as Deliveroo, UberEATS and HelloFresh. He asked: “Could convenience stores be hubs for these services?” For example, a customer orders a recipe box from HelloFresh and the driver gathers the ingredients from the nearest convenience store before delivery.

A similar scheme was cited by Michael Freedman, senior shopper insight manager at IGD, during his presentation. At Coop stores in Denmark – the country’s largest organic food retailer and a consumer co-operative with more than 1.3 million members – bags are made up with ingredients and recipe cards. Shoppers can pick up one of the bags and have all the ingredients for that recipe, ready to be cooked at home.

Related: Coop Denmark to sell Waitrose products

Top up shopping remains the clear grower in retail, comprising 92% of shopping missions in the last month (up from 83% in 2014 and 87% in 2015). Shoppers perform, on average, 2.6 top up shops in a week. Mr Freedman called for convenience retailers to look to technology to help them provide convenient solutions for shoppers, such as collection boxes for online orders. Richard Woodward, director of sales at HL Display echoed these thoughts with the assertion that stores should also be an attractive place to be. “Some of the best things are invisible,” he said, such as chillers that automatically push items to the front of the shelves.

Summing up the day’s proceedings, IGD’s chief economist James Walton spoke about how retailers should “give shoppers a reason to pay more” and how technology is raising the standards of what stores can offer. Looking at ways in which co-operatives and convenience retailers could expand, Mr Walton mentioned the success of Airbnb and the collaborative economy. Is this a way in which convenience retailers could share facilities? He asked: “Is it better to own these facilities, or just borrow them?”