ASIAN TRADER attended the IGD's Convenience Summit 2015 to see what speakers had to say about the direction of retail. IGD's team of retail experts track the latest industry trends and had some strong convictions about the future of convenience in a multi-channel world. They were joined by industry figures from outside organisations like Booker's Retail Sales Director Steve Fox who gave their own perspective on the challenges ahead.
As the summit got started Michael Freedman, Shopper Insight Manager at IGD discussed the phenomenon of 'top-up' shopping and what it meant for convenience.  According to his research 87% of all shoppers made additional short trips to buy what they needed in addition to their main shopping trip at the weekend; in fact 9% of consumers now made no main shopping trip at all he claimed. People shopped on average 24 times a month across all shopping formats and the trend of topping-up worked in favour of local retailers. Nine of these short shopping trips were to c-stores compared with seven to mutliple retailers. The trend was also spreading as 46% of consumers said they were top-up shopping more often.
Pepsico Convenience Director Ally Duncan discussed the prevelence of customers shopping around and how to attract them into your business. He cited research showing shoppers now used 3.5 shopping channels per month on average. A quickly growing market were food to go products he told listeners. Breakfast to go was the fastest growing market, while lunch drew in the largest number of mission shoppers, and snacks were the biggest impulse buys. This emphasised the location aspect of retailing such as affinity merchandising, the practice of arranging products which go together side by side in stores. Ally gave the example of  positioning alcoholic products near the crisp, snacks and nuts aisle. This appealed to the typical male mission shopper who spends just three minutes in a typical trip. By allowing them to find the goods they needed quickly and close together the chances of impluse buys were increased.
Meanwhile James Walton, the Chief Economist of IGD Retail Analysis thought the next five years looked good for the independent retail sector. First of all the grocery sector was experiencing a fuel dividend as falling prices made deliveries cheaper. Secondly, grocery retail volumes were recovering, and this was being driven by population growth rather than falling prices. Since 2005 the UK had added 4.5 million people to its population according to the Office of National Statistics figures (ONS). The result was that the UK's grocery retail market was forecast to rise from £177.5 billion this year to £200.6 billion in 2015. After adjusting for population growth and inflation over the next five years this still left a net increase of £6.4 billion he said.
While an increase of £6.4 billion will be good news for independent retailers they won't be the only beneficiaries. James Walton's research  also predicted that growth in the discount and online channels will rocket, with growth forecasts of 82.2% and 92.2% respectively. The convenience channel meanwhile is forecast to grow by a healthy 17% by 2020. Competition from online sites and discounters means that grocery retail prices are still being pushed downwards and retailers will have to diversify away to keep up.
Booker Group's Steve Fox said austerity had been good for the convenience channel but he echoed James Walton, saying store owners should make big lines bigger and use promotions to sell in bulk. Fewer lines meant bigger value once duplication was elminated he claimed. Steve also made the point that you can sell big packs in convenience and he used the examples of 15 cans of lager or box of 32 crisp packets as an example of how this can work. The Cooperative Ltd's Michael Spencer had some other advice for retailers looking to differentiate themselves from competing channels. Knowing who your customers were was a strength of local businesses, and a service that discounters couldn't offer. If c-store owners knew which customers would return to the store they could devise promotions and  rewards schemes for loyal customers he said.
One such local business owner was Dee Sedani, a One Stop retailer who gave concrete examples of the points above. Even a thousand square feet was enough to stock everything a c-store needed he said, but you had to get the range right. The key to success was to concentrate on your store, staff and customers. Dee also gave examples of how he'd reduced duplications in his own store recently, reducing soup lines from 26 to 4 and shower gels from 21 to just 3. Passion, local knowledge and location were the drivers of retail success in the convenience channel. Dee also pointed out that his store is the hub of the local community and knowing every customer by name helps to build relationships.