Home' Convenience and Impulse Retailing : February 2010 Contents February 2010 | C&I | www.c-store.com.au
AT A GLANCE
• Over time, some small grocery
offers have inadvertently been
training the consumer that they
are more likely to get all the goods
they need in a supermarket rather
than taking the risk of going to a
C&I outlet where they may not be
able to get what they need.
• Many smaller stores have limited
shelf space that they can make
available for dry grocery products
that are not for immediate personal
• Consumer studies have identified
that, if the key products are not in
stock, then the consumer ignores
the category totally. And that
means lost opportunities and lost
• Price positioning of convenience is
becoming increasingly challenging
due to blurring of channels,
with supermarkets becoming
increasingly convenient to shop at
with the growth of neighbourhood
smaller footprint stores.
reason that the consumer is in the store
looking for a product in the first place is
because it is out of stock at their home.
Craig Matthews, the National Marketing
Manager at the Lucky 7 network, which
services consumers looking for top-up
purchases and emergency items at the
times they need them, says that bread and
milk is an emotive topic in independent
the United Kingdom there is a clear
trend for most small box retailers to try
to broaden their customer profile from
predominantly young male. They are
doing this by moving away from insult
pricing and instead setting prices at
just a slight premium over the Big Box
"Grocery shopping is not always
... but it is up to the convenience store
operator to understand categories which
are more impulse versus planned and
price their product accordingly."
Again, the secret is perhaps to
understand that customers have certain
expectations of what convenience and
impulse outlets sell, at what price, and
what they therefore expect to buy there.
But before customer habits can be
changed, they have to be understood.
Mr Conomos says, for example, that it
is a fact that purchases such as phone
cards, newspapers and magazine are
planned, while beverages and snacks are
generally impulse driven.
In stores where space is at a premium,
all categories need to earn their spot
on the shelves and things can and do
evolve and change. For example, Mr
Conomos says that major retailers are
now increasingly focusing on fresh foods
and private labels as potential points
of differentiation from competitors ...
and that has had a knock-on effect for
He believes there has been an
increasing focus put on the 'food to
go' category across convenience, with
the old meat pie and beverage giving
way to some extent to more high-end
sandwiches and salads.
Manage your range for evolving
"Range management for 'ready to go
food' is increasingly shifting to 'time of
day' ranging, but volumes are an issue
and as a result wastage is difficult to
manage," he said. "Ready to go food
appears to be the space stores are
wise and therefore have limited shelf
space that they can make available for
dry grocery products that are not for
immediate personal consumption.
Nonetheless, the fact is that most
retailers are not getting it right and are
not carrying the right product mix in all
key categories or, if they are, they are not
consistently having it in stock. In other
words, over time, some small grocery
offers have inadvertently been training
the consumer that they are more likely
to get all the goods they need in a
supermarket rather than taking the risk
of going to a C&I outlet where they may
not be able to get what they need.
Furthermore, many consumer studies
have identified that, if the key products
are not in stock, then the consumer
ignores the category totally. And that
means lost opportunities and lost profit.
Steve Cardinale, the Marketing
Director at the New Sunrise Group,
points to the breakfast occasion as a way
of highlighting the problems C&I outlets
face ... and the opportunities that many
"Just having bread and milk is not
good enough ... if you are competing
against the Big Box retailers you also
need to have all the other key products
that are in the pantry and fridge that
are used on the breakfast table -- such
as sugar, butter, jam, cereal and coffee,"
he said. "All these products must be in
stock all the time if you are going to
build consumer confidence."
The point being that when a consumer
is after wholemeal bread, lite milk or
brown sugar, for example, he or she
will go to the site where they know it is
always in stock.
Range and stock levels are then
crucial. While the small grocery offer
could broadly be said to be dry and
refrigerated foods, as well as non-food
products that do not belong to any of the
other major categories, further analysis
is perhaps useful.
A good small grocery offer should
reflect the key cupboards in a household
and the occasion that consumers go
to the cupboard. Steve Cardinale has
broken these down to the pantry, the
fridge, the cupboards and the cabinet.
He says the kitchen, pantry and fridge
are for breakfast, treats and afternoon
tea; the laundry cupboard is for washing
and feeding the pet; under the sink is for
cleaning and wiping; and the bathroom
cabinet is for getting ready either to go
Meet specific needs
"I like to set up a store so that it feels like
we are looking into one of these cupboards
to meet a specific need -- in most cases it
really does not matter if it is not the brand
they would normally use," he said. "The
important thing is that the mix of products
in the pantry, fridge, cupboards and cabinets
is correct, and that they are in stock."
He says it may seem obvious, but the
We need to think about meal occasions and
to make it simple by thinking of products that
are easy to prepare. Steve Cardinale, New
convenience, as it is a traffic driver much like
fuel is to a Petrol & Convenience banner.
"Due to the fact that these items are an
everyday purchase, price is top of mind
and therefore independents need to be
competitive with other groups and chains,"
he said. "Importantly it is the range and
availability of these commodities at the
times when consumers want them that
needs to be addressed ... more often than
not, this is the reason why convenience
stores struggle to make themselves
destinations for milk and bread."
What do your customers want?
And, he says, it all comes down to
customer needs and expectations.
"Due to the dynamics of the market,
consumers' expectation of what they
want out of a convenience store is
constantly changing," he said.
"Typically 65% or more of all
purchases for our network come from
the immediate counter area ... however
we are also aware that it is important
to present a full offer to the customer,
so we focus a lot of our attention to
the general grocery categories with an
extended range of goods and a higher
weighting on promotional activity."
Certainly promotions, and pricing
in general, is an area which deserves
serious analysis. In countries such as
a 'distress' purchase in our Lucky 7
convenience stores and, in many cases,
our stores have regular customers
who use the store for more than a few
top-up items and we know that when
we promote our grocery items in our
monthly promotional program, there is
a marked increase in purchases on these
items," said Mr Matthews.
"This is no coincidence and we can
determine that a percentage of these
sales are a result of consumers coming
in for one or two items and picking
up the grocery promotions that were
not necessarily part of their original
It is clear then that the way that the
small grocery offer is priced is attracting
a lot more attention and some long-held
conventional assumptions are finally
"Price positioning of convenience
is becoming increasingly challenging
due to blurring of channels, with
supermarkets becoming increasingly
convenient to shop at with the growth of
neighbourhood smaller footprint stores,"
said Kosta Conomos, Executive Director,
Nielsen Retailer Services.
"Bread and milk is already a key focus
of convenience stores and is increasingly
becoming a destination of choice driven
by the bread and milk offers in stores
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