Cheaper prices are driving convenience store shoppers towards the discounters, new data has shown.
According to the Lumina Intelligence UK Convenience Market Report 2022, there has been a “notable uplift” in convenience shoppers also visiting discounter stores, driven by increased price sensitivity.
It revealed in the 12 weeks ending 6 March, 30.5% of convenience store shoppers also shopped in a discounter each week, while, more recently, during the 12-week period to 29 May, it had increased to 33.2%.
As convenience store shoppers become more value-led, the report outlined how retailers should look to review own-label ranges to cater these changing consumer needs.
It pointed to household staples as a way of targeting this, including cooking sauces and breakfast cereals, as these are among the categories that are seeing the most growth in own-label purchasing.
For example, own-label carbonated soft drinks had seen a 65% growth in purchases in the 12 weeks ending 29 May, while own-label cooking pasta and curry sauces saw a 59% uptick in growth.
On the other hand, rather than competing with discounters on price, convenience retailers can add value by offering other services such as a Post Office, pharmacy, cash machine or delivery collection and returns service as a point of difference.
The sector, however, is still forecast to reach a value of £45.2bn in 2022, equating to a 3.2% growth compared to 2021, the report showed.
Co-ops and convenience multiples, a chain of 10 or more convenience stores under a centrally-owned managed or franchised fascia, in particular, are expected to see the strongest turnover growth this year, by 5.6% and 3.8% in 2022 respectively. This growth will be underpinned by investment in store refits and physical expansion, as well as developments in delivery services.
Both are benefiting from a recovery in transient locations and food-to-go missions as shoppers spend more time out of home post-pandemic, the report added.
Forecourts, symbol groups, and unaffiliated independents are also set to see growth, up 1.6%, 2.9%, and 1.7% respectively, but at a slower rate to the total convenience market. The overall market growth follows a small decline in 2021 of 0.8%, as a result of hospitality reopening and coronavirus restrictions easing.
The convenience sector is also expected to see a 0.6% growth in outlets, with a “post-pandemic property boom” creating greater prospects for operators to expand.
“UK convenience retail remains in a strong position,” said Lumina Intelligence insight director Blonnie Whist. ”Despite cost of living challenges, the market will benefit from a resurgence in on-the-go missions in 2022, as shoppers seek more accessibly priced options compared to foodservice channels.
“Leveraging different store formats, including grocery-led, food to go-led, service-led and delivery will be key to growth across the next three years.
“From a delivery perspective, retailers need to capitalise on events including the Women’s Euros and the FIFA World Cup through encouraging shoppers to use delivery for entertaining and nights in.”
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