One of the top three convenience retailers in Japan will enter the UK market and become a leading player by 2016.
That’s one of 20 opinions expressed by convenience consultants, SRCG, in their new Shape of Convenience 2016 report.
The study, which focuses on the major convenience developments in the UK, US, Ireland, Hong Kong and Japan, also outlines 10 key themes SRCG believes will impact global convenience retailing.
They include the expanding availability of fresh and healthier food, localness, growth of US-style convenient drug stores, the extension of dark market legislation in tobacco and growth in mobile and contactless payments.
The report explores the growth of Japanese convenience retailers and says they have ambitious expansion plans both in their home market and overseas.
Three of the country’s leading retailers – FamilyMart, Seven Eleven and Lawson – have around 42,000 stores overseas and will continue to expand in Asian markets and further afield, says SRCG.
New areas of development in Japan include a focus on the ageing population by delivering a local convenience offer and products associated with wellness.
Leading players are also successful in targeting the lunch time and dinner market, reports SRCG. Convenience operators provide good quality and are affordable, versus restaurants which are losing share.
In terms of innovative formats, Lawson’s Store 100 fresh food store is described as a mini-supermarket offering daily delivered fresh foods and delicatessen items in small sizes and quantities. According to SRCG, it meets the needs of housewives, the middle-aged and senior consumers and smaller households.
Lawson is also reported to be trialing an in-store kitchen in Osaka and has plans for over 1,000 kitchen stores. The kitchen innovation increases freshness and flexibility to shopper needs, while reducing daily store deliveries, says the report.
Expanding availability of fresh and healthier foods will become a hallmark of the convenience sector over the next five years, says SRCG. However, developing a healthy offer is not solely about fresh produce. Retailers can also play a part in supporting healthier choices in categories such as soft drinks, it says.
Either way, they need to step up to the healthy plate.
“Convenience retailers must seriously embrace fresh and healthy food, as a failure to participate in this high margin opportunity will see demanding shoppers take their ‘traditional’ convenience purchases to specialists and convenient grocers who do meet this higher priority need,” say researchers.
Localness is another key theme for the future, says the report. And it highlights the trend for food trucks in the US and predicts it will migrate to the UK.
“This is the ultimate convenience fresh food,” says SRCG. “It will take off in the UK and provide competition to c-stores and an additional motivation to develop more fresh and interesting food-to-go offers.”
Drug stores will continue to grow their share of convenience spend, according to the report. In the US, Walgreens and CVS, have around 15,000 stores and the appeal of convenience store and grocery shoppers is hugely attractive. With a wide offer, large, well-lit stores and ample parking, drug stores are already the c-store of choice for females, says SRCG.
Tobacco dark market legislation is under discussion in four of the five markets, featured in the report, and is already in place in Ireland.
Convenience retailers in Ireland, Hong Kong, Japan and the UK are reducing their dependence on cigarette sales and SRCG predicts US retailers in the North East and California will be among the first to adopt programmes reducing tobacco dependency as dark market legislation is likely to be passed first in these states.
Mobile, contactless and stored value payment systems, spawned by transport systems, are also forecast to grow in convenience, according to the report. Payment ease and time saving will emerge as top convenience shopping needs in future, says SRCG.
The report concludes with SRCG’s 10 top predictions for developments in convenience retailing beyond 2016.