Nearly three quarters (72%) of shoppers believe local shops should play an important role as part of the community and more than half (53%) say local shops would trade better if they were more in touch with the local community.
That’s one of the key findings of new research into how the UK’s shoppers are interacting with local convenience stores has been launched by a leading retail and shopper marketing agency, Savvy Marketing. The survey (of 1,000 household shopping decision makers) examines trends in shopper use and attitudes towards convenience stores, a key area of growth for the UK grocery sector.
The local shop is very much viewed as part of the local community by shoppers and it’s essential retailers don’t lose sight of this if they want to build genuine loyalty among their shoppers, said Savvy Marketing. This goes beyond stocking ranges that are relevant to local shoppers. In the eyes of shoppers, the best local retailers are actively involved in the community, supporting local causes and the issues that matter.
To put the community aspect of convenience retailing in perspective, shoppers see their local store as second only to the local school in its importance as part of the local neighbourhood, researchers said.
Alastair Lockhart, head of insight at Savvy Marketing, said: “As the convenience market grows – so too will the fight for marketshare. Retailers need to make sure each store is on top of its game to ensure space productivity isn’t cannibalised by neighbouring outlets. Price will continue to be the major issue for shoppers, so retailers need to look to their wider proposition and role, perhaps as part of the community, to drive loyalty and justify the premium they charge.
“In the end a convenience store is defined by its local area and it exists to serve its local neighbourhood. Store managers and their staff own the crucial day-to-day relationships with their shoppers and this gives them vital insight into the needs and wants of their shopper base. Ultimately the retailers that will win the convenience race in the long term will be those that best understand their local market and, vitally, are able to act upon that insight in collaboration with key brand partners.”
Key findings and observations:
- Footfall: 18% of UK shoppers haven’t visited a convenience store in the past three months. For a shrinking minority this is because they don’t have one nearby. For the majority however it comes down to a matter of how they define convenience. Many find that for them a supermarket is the most convenient store to visit because either it’s close to home, it has plentiful parking or because it’s located on their commute
Implication: There’s a common misconception all top-up shops take place in convenience stores – the fact is almost half of top-up shops take place in supermarkets.
- Location: the average UK shopper’s local convenience store is seven minutes’ walk from their home and 78% of the population lives within 10 minutes’ walk of a convenience store
Implication: Retailers must give considerable thought to store location – especially since 63% of shoppers say they typically walk to their local shop. Location is a key driver of store choice.
- Happy customers: when rating their local convenience store, shoppers are generally complimentary. Only 8% rated friendliness of staff as poor, while 56% were rated good or very good
Implication: Giving good quality customer care literally ‘pays’ dividends and is a key differentiator for convenience store formats versus supermarkets.
- Value: only a third of shoppers rate their local convenience store as good or very good when it comes to price, and 77% said lower prices would encourage them to visit their local convenience store more often
Implication: Convenience store pricing presents retailers with significant challenges. The cost of servicing a convenience store is proportionally higher than a superstore due to their lack of efficiencies of scale and, in most cases, some of this cost has to be passed on to shoppers. But with less than one-third of shoppers prepared to pay a small premium to shop at a convenience store close to their home, retailers need to look to innovative ways to justify the premium they charge.
- Driving basket value: despite investments in convenience stores the average transaction level remains very low at £6.65 – explained mainly by the high percentage of impulse and distress shopping missions conducted at these stores.
Implication: The current low base represents a huge opportunity for retailers. Convenience shoppers are less focused in their approach to shopping than their counterparts in a supermarket and so they are more easily influenced by a good deal or communication that is relevant to their need states or mission. It’s important that brands develop specific convenience strategies, rather than bolting on to a broader shopper marketing plan.
“We fully expect the convenience sector to continue to grow rapidly over the next five to 10 years – mainly thanks to huge initiatives by the big four, and efforts of symbol groups, to improve prices and tailor convenience focused marketing,” said Lockhart.
“These efforts – coupled with a growing appetite from convenience shoppers for a more top-up orientated approach to grocery shopping, will improve formats – but there are significant challenges to overcome. Our research takes a closer look at the issues – and opportunity that these stores present.”