The Future Of The Convenience Market
• September 2014 The Future Of The Convenience Channel
Amanda Jones, Conviviality Retail, Chief Operating Officer June 2015 My journey to convenience retailing.....
1 Conviviality...Our business
The UK’s largest off-licence and convenience chain with over 600 stores
We have 400 Franchisees
Our stores are at the heart of communities serving mainly C2,D,E shoppers
We are a discounter...... we price over 12% lower than the big 4 supermarkets
We are well placed to capture share from the growing Convenience market
Our aim is to be the best value off licence led convenience store in the eyes of our customers, employees and Franchisees
2 We specialise with our unique point of difference in the Convenience Market
Destination value led off licence with tobacco, impulse crisps snacks and confectionary
Destination off licence led Convenience store serving local community needs
Wine and Sprits Specialist providing excellent range and service for customers wanting range beyond the supermarket offering
Destination volume based mission, full range and choice. Pricing targeted towards better value case deals and offers
3 The UK Grocery Market is undergoing unprecedented change
As UK enters deflation, Asda boss Andy Clarke calls 2015 supermarkets‘ "most challenging year yet"
Grocery price falls hurting UK supermarkets Lower prices have taken £532m out of supermarket tills, Kantar Worldpanel says Aldi, Lidl and Waitrose are only food retailers growing sales Latest industry sales figures underline pressure on "big four" supermarkets
4 Convenience, Online and Discount to grow fastest Price is increasingly important in determining where to shop, but Location remains the primary reason for store choice.
6 Customers are in fact slow to change their shopping habits, with better prices and moving home being the main drivers for change
7 The changing face of convenience stores...
FROM THIS… TO THIS…
FROM THIS… TO THIS…
8 Major Supermarkets have changed the Convenience channel for the better
9 Consumers changing needs favour the convenience channel
Source: Kantar Retail 2014, ONS 2014, Eurostat 2014 10 Retailers are developing new formats that cross traditional channel boundaries
• ‘blurring’ of channels is occurring as retailers think differently about convenience • The newest development is a hybrid format that bridges the divide between discount & convenience
11
Symbols account for 42% of the channel - and growing at +5%
Share ofsales Share Share ofstores Share
Note: YoY growth figures given as actual growth not % share
Source: IGD & WRBM 2014 12 Symbols have grown consistently ahead of the channel for 10years
• A Symbol retailer includes independents that are affiliated to a symbol, fascia or franchise group and typically, purchase a proportion of the goods from their respective symbol group
• Symbol groups represent the largest share – more than double that of Convenience Multiples • They are developing their offers to meet specific shopper missions, particularly around fresh and quality • Shopper satisfaction ratings have improved year after year after year • Retailers benefit from a branded shop fascia • IT and logistics support • Marketing and promotions
13 Who is the Convenience shopper today?
Source: ACS, HIM 2014 14 Local is increasingly important
15 A demand for better pricing will continue
• Shoppers are less tolerant of premium pricing in convenience - up to 11% premium on supermarket prices is acceptable • Convenience stores need to show VFM - promotions are becoming an expectation • Bargain Booze pricing is on average 12% cheaper than the multiples
Source: HIM, IGD 2014 16 Fresh food and good store standards are an expectation
17 Shoppers rate Symbol retailers higher than Independents or Multiples
Source: ACS, HIM 2014 18 We are Learning from the Best in Class from Around the World
Best in class from around the world can be grouped into three distinct convenience models
Fresh & Meal Solutions: • Pioneered in Western Europe • Fresh is a hero category • Offers inspiration and solutions
Food To Go: • Driven by forecourt operators • Targeted at food-for-now • Limited focus on wider shopper needs
Impulse: • Highly populated Asian markets • About the here and now • Offer changes by time of day
19 Hong Kong, 7-eleven Hot Food To Go & Services
The store offers additional services to shoppers which includes; free wi-fi, transport card top-up, mobile phone top-up, mobile charging, pre-paid Alipay (third party payment solution), ITunes cards and bill payments. All these services are immediate – offering customers solutions to problems in real time
A hot food counter offers local delicacies which are available as part of meal solutions which change throughout the day. Due to the nature of the store, and the focus on impulse purchases, a strong food-to-go offer is essential to compete with specialist foodservice operators such as Starbucks
20 The Convenience market is expected to reach £49bn by 2019
By 2019, CAGR Convenience will 5.5% account for 24p in 49.0 50 every £1 spent on 45 food & grocery 40 37.4 35 30 Sales (£bn)Sales 25 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e 2019e
• Over the next 5 years, sales through Superstores and Hypermarkets will decline by £3bn • …Convenience will take almost a quarter of the market by 2019 – worth £49bn (+30%) as shoppers increasingly prefer to shop locally • Symbol retailers are well positioned to deliver against the growing trends
Source: IGD & ACS 2014 21 There are 5 key areas to compete in our market...
Great store standards
Range and services that customers want
Excellent Customer Service
Deliver consistently good value
Emphasis on community
22 How will Convenience retailing develop?
Combining Functional & Emotional:
Use of Digital and Social Media
Click & Collect, Apps, Services
Discount ranges
Longer opening hours
Meet the Food Service missions
Become the community hub for goods and
services
23 “Creativity is one of the last remaining legal ways of gaining an unfair advantage over the competition.”
Ed McCabe
24