Key trends convenience retailers need to watch out for

Convenience stores – a mainstay of the modern retail co-op sector – generate £43.2bn to the economy

Delegates at Co-operatives UK’s Practitioners Forum got to hear about some of the latest trends affecting the convenience sector from Chris Noice, director of communications at the Association of Convenience Stores (ACS).

Mostly independent retailers, the UK’s 47,079 convenience stores, many of these co-ops, generate £43.2bn to the economy. They also provide various services for their local community, such as free AGMs, post offices, food bank usage, local grocery delivery, bill payments, lottery and click and collect.

Before the pandemic, consumers came into their convenience stores twice a week; now they visit just once a week. But the average basket size of a convenience store customer has increased over the past 12 months, said Mr Noice, as more and more people do all their shopping from their local convenience store.

Convenience stores’ home deliveries have also risen, but Mr Noice that these do not always take place via mobile or online platforms. Many customers served by convenience stores, particularly those in the more remote areas, prefer to place orders via phone.

Most customers come from less than a mile away and walk to the shop, giving convenience shopping a lower carbon impact.

And while the convenience sector has outgrown the rest of the market, there are several challenges ahead.

The current shortage of drivers is one of them and Mr Noice says this trend, which started five years ago, is here to stay as older drivers continue to retire.  

Another challenge will come from discounters such as Aldi and Lidl, whose offering is based on function, efficiency and price, rather than brand or friendly experience. Some convenience apps are also trying to take a share of the market.

“The majority of convenience stores don’t operate on the high street so it would be difficult for these businesses to be viable there,” said Mr Noice.

The UK government also intends to introduce new regulation to tackle down on obesity and convenience stores will have to watch out for this as some discount offers for sugary products might be banned.

Another big trend, says Mr Noice, is sustainability. Businesses might soon be required to run deposit return schemes, he said, adding that if this will be done manually convenience stores will have additional health and safety issues to deal with.

Convenience stores are also starting to offer more zero waste products and bulk-buying options. However, Mr Noice thinks there is room for improvement when it comes to branding these products to appeal to a wider demographic.

The spread of EV charging is also something convenience stores could benefit from, should they choose to offer charging stations. Mr Noice suggests making these available during the night to avoid filling parking spaces during the day.

Locally sourced products are another big trend in retail. A new survey from Weetabix found that for one in three consumers, the pandemic made them realise how important locally sourced products are to the economy, and 48% now seek out those items when they shop. Convenience retailers will have to continue to expand their local produce offering and maintain very close relationships with local businesses, said Mr Noice.

As some customers are overspending to make up for lost experiences during the pandemic, others are more cautious and use surplus money but remain fearful of future austerity.

The increase in the number of people working from home is also likely to drive sales in convenience stores, added Mr Noice.

He also encourages co-op retailers to use social media to make sure they reach customers and think about whether they can offer a service people are crying out for locally to boost their standing in the community.

And there is reason to be optimistic about the future. When asked which services have the most positive impact, they put convenience stores as the number one service, ahead of pharmacies and post offices.