(COVID-19): Impact on Global Convenience Trends
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Post-coronavirus (COVID-19): impact on global convenience trends May 2020 © IGD 2020 Image source: 7-Eleven Introduction This insight presentation was prepared by: Charles Chan Rachel Sibson Senior Retail Analyst Retail Analyst [email protected] [email protected] At the start of 2020, we highlighted five global trends we believed would shape the development of convenience stores globally in the short term. While our trends remain relevant, the retail landscape has, with Coronavirus (COVID- 19), undergone major changes. The pandemic has impacted consumer behaviour and the strategies of suppliers and retailers. Our own data for the UK, US and China presents a mixed picture for growth through 2020 as a result of COVID-19. Therefore convenience operators have implemented measures to ensure shoppers can safely access food and consumer goods to ensure the channel remains relevant. This report highlights how COVID-19 has evolved or accelerated our global convenience trends, using case studies for inspiration and providing insight on how you can respond. © IGD 2020 Source: IGD Research Content 1 Executive Summary 2 Convenience channel forecasts 3 Five global convenience trends 4 Areas to watch: North America, Europe and Asia 5 Key short to medium term implications © IGD 2020 Source: IGD Research Page 3 Executive summary Redefining Tech enabling Going beyond c- Stronger health Better minimart product range convenience store retailing focus and local stores • Convenient • Automated • New innovative • Fresh-focused • Urban local stores shopper-led payment solutions tailored formats store concepts merchandising • Community- • “Just walk-out” • Targeting new • Expanding health focused initiatives • Stronger frozen, technology and missions and and wellness prepared dishes • Serving wider frictionless stores offering new ranges and food for later community needs solutions • Delivering on- • Responding to new • Non-food demand and the • Modular health trends categories last mile convenience stores emerging Acceleration Adaptation Adaptation Adaptation Acceleration • Increased • Practical formats • Greater focus on • Changes to • A preference to adoption of tech over experiential core ranges packaging, support and shop to enable in the short to especially fresh at local stores contact-free medium term • Rise in meal and bakery, and • Stronger support shopping solutions and • Reallocating frozen products how these are to the community • More operators space in-store, served. • Urban stores partnering but some • Snacking • Temporary pivot most adversely delivery temporary store opportunities in towards health- impacted by providers closures the home related services lockdown in many markets © IGD 2020 Source: IGD Research Page 4 Convenience channel forecasts: US, China, UK 2020 2020 convenience shares: values in local currency 21.6% 21.6% 21.7% 21.7% 16.0% 15.4% 15.3% 15.1% 10.3% 9.6% 9.4% 9.3% -4.8bn -4.6bn -3.9bn -84.4bn -106.9bn -123.8bn +1.5bn +1.8bn +2.1bn USA China UK pre-COVID-19 Low Medium High This forecast builds on IGD’s pre-COVID market and channel estimates and provides a point-in-time view on the potential shifts in context of three scenarios for the US, China and the UK. More data and insight on other grocery channels can be found here. Convenience appears in different forms around the world. In USA, a large proportion of convenience stores are at gas stations, which has seen a significant decline in footfall, driven by the lack of travel. In China, convenience chains are seeing bigger basket sizes, but this has been offset by some temporary store closures and shoppers’ preference to shop online. In the UK, more trips and larger top ups, along with new main shop missions will drive growth. Just in these 3 markets you can see the mixed picture for the future of convenience, post COVID-19. Hence the need to respond. © IGD 2020 Source: IGD Research Page 5 Five global convenience trends Technology enabling convenience Going beyond c-store retailing Redefining product range Stronger health focus Better minimart and local stores © IGD 2020 Source: IGD Research Page 6 Technology enabling convenience Partnering with service providers Shopper use of apps soaring On-demand restaurant delivery Convenience store ordering platform, Snappy Shopper revealed that stores Speed and efficiency of service has company, DoorDash, is evolving its selling through its app increased by a always been particularly important in the business model to offer delivery from factor of five. The number of convenience channel. convenience stores, e.g. 7-Eleven, Wawa, Casey’s General Store, and customers using the app increased Following the outbreak of COVID-19, the Circle K. by 360% and the value of sales need to make shopping frictionless has through it jumped by 520%. become even more important. We have seen retailers use technology and digital commerce to encourage contact-free and cashless shopping and contactless delivery. To reach shoppers unable to physically visit stores, we have seen many retailers partner with service and on-demand fulfilment platforms to deliver their goods. Strengthening fulfilment capability Contact-free shopping With many consumers staying at Loyalty marketing platform, Liquid home and using online shopping, Barcodes, launched a “pre-order and Columbia’s market leader, D1 has pre-pay” technology solution. It partnered with two third party last enables shoppers to order products mile delivery services Mi Aguila and from their smartphone or computer, Picap, to offer home delivery. choose a (partner) store location and pickup time, and pay for the order. © IGD 2020 Source: IGD Research Image sources: Liquid Barcodes, Snappy Shopper, DoorDash, D1 Page 7 Going beyond c-store retailing Combined store formats Improving accessibility JD opened its first JD Convenience FamilyMart introduced two new Store with an in-store bakery in We expect the development of experiential models to improve accessibility. Beijing. Products like doughnuts and convenience formats to slow down FamilyMart Corner is a colourful food bread are baked onsite. The aim is to because of COVID-19. and drinks container mart while offer combined store formats to meet automatic vending machines installed However, retailers will remain committed the diversified needs of shoppers in outside selected stores offer to delivering products and services that the ‘new normal’. convenience to consumers on the go. extend into areas beyond conventional shopping missions associated with convenience. Retailers are reallocating space and adjusting how they trade. Practical stores that can be rolled out quickly, targeting specific missions have also arisen, while so have formats and initiatives that keep both staff and shoppers safe. Elements like leisure, restaurants, seating, Alternative dine-in options Pop-up stores dining areas have been removed / 7-Eleven’s Night Market On-Line Tesco opened pop-up stores at NHS temporarily stopped. allows consumers to stay at home and Nightingale sites across the UK to give conveniently order Taiwanese snacks healthcare workers easy access to and meals. The retailer is promoting food and essential household items. the service on social media and using The first store opened at the ExCel ‘online big sale(s)’ to engage new Centre in London. customers. © IGD 2020 Source: IGD Research Image sources: Tesco, FamilyMart, JD, 7-Eleven Page 8 Redefining product range Foodservice partnerships Dine at home experiences Alfamart partnered with famous Fresh the Good Food Market COVID-19 has reshaped, although Filipino fast food chain Jollibee to partnered with two Dublin probably only temporarily, what products offer marinated frozen chicken cut- restaurants to bring customers a are available in convenience stores ups, enabling shoppers to recreate cook at home dining experience. The globally. the Jollibee experience at home. two BBQ meal kit boxes were prepared by ASADOR and PRADO. ‘Top up’ missions have increased, plus there are more regular shopping trips. While daily visits to convenience stores for ready-to-eat and beverages in many markets in Asia, for example, have shifted towards products that can be consumed in the home. Retailers have also partnered with foodservice brands to bring dining out experiences inside the home. Focusing on core essentials Limiting items per shopper Lawson is expanding its readymade Around the world convenience side dishes for evening meals. It is retailers introduced limits to the strengthening its range of long-life number of products shoppers can buy staple goods, geared towards the trend to maintain supply. These limits are of remaining at home for long periods, on staple items, or across the entire e.g. frozen foods, instant noodles, range depending on the retailer. retort packaged food and tins. © IGD 2020 Source: IGD Research Image sources: Alfamart Page 9 Stronger heath focus Precautionary measures for fresh Health-related products 7-Eleven implemented measures for 7-Eleven worked with startup Historically, shoppers have often its fresh food offer. All self-serve fresh NGOHub to provide supplies to the prioritised convenience and time food items are now clerk-served, fresh elderly, e.g. supplements and hand optimisation at the expense of health or bakes goods are sold pre-packaged, sanitisers. It also partnered Lucence price in convenience retailing. and fresh condiment bars are replaced to donate 2,000 saliva collection test with pre-packaged condiments. kits to the Health Ministry. This notion, however, has