Mark Croxton, Symphony EYC’s head of global customer support, says the battle for the convenience market is warming up
“With Tesco’s new strategy front of mind, are we just starting to see the first signs that the convenience store sector is coming under pressure? If so, can we expect to see the other major retail brands struggling in the same way?
“Notably, Tesco’s decision to not only rationalise its HQ infrastructure but also announce the closure of some Tesco Express stores has raised eyebrows; indicating a growing strain on convenience. Given retailers’ focus on convenience as their best hope of gaining a competitive edge, seeing pressure growing, and profits falling must be keeping a few people awake at night. Tesco is the first to admit its issues, how long before the others follow suit?
“It’s still true to say that providing a truly local offering is what consumers are looking for and so prime location is still No 1 on the priority list. But what happens when your competitors open stores next door, across the road and round the corner. Suddenly that piece of prime real estate (which you’re paying through the nose for) doesn’t seem that prime any more. The battleground then reverts to who can provide the best localised offer – covering assortment, availability and price.
“Just focusing on price could create a price war in convenience that will risk eroding the higher margins generally gained in convenience stores. The battle lines, then, have to be drawn in the arena of hyper-localisation – a truly personalised experience for local people – and that’s all about understanding the individual customer and matching their desires with assortment and availability planning.
“Without doubt, Tesco could weather a price war better than some of the other big players. The point is do they really want to take others on in the higher margin convenience sector, where economies of scale just aren’t there? We believe the solution in executing a hyper-local strategy is truly understanding your customer profile and devising a proposition around 1) differentiation 2) assortment 3) availability and service.”