C-store operators have their eye off the ball if they think shoppers only care about prices says Siân Harrington
W hen Big Food Group boss Bill Grimsey bangs on about the lack of a level playing field on price, his words strike a chord with convenience chiefs across the country. Price has been the dominant issue ever since supermarkets began their onslaught into the neighbourhood sector.
But do shoppers really care that much about price when it comes to a convenience trip? And does the price disadvantage threaten the survival of independent convenience retailers?
New research from Harris International Marketing indicates that the answer to both of these questions is a categorical No.
While many convenience shoppers put reduced prices at the top of the list when asked what their store should focus on in the next 12 months (38%), the reality is they are not quite so price-sensitive in practice.
Consider the evidence.
While shoppers say price is key, three-quarters admitted they did not compare prices at convenience stores with those at multiple supermarkets; some 81% would continue to shop their c-store as frequently as they did now if prices remained the same in the next 12 months; and only 5% would shop less frequently, while 11% would increase their frequency.
The vast majority of shoppers do their main shop in a supermarket but 30% believed the gap in prices between this supermarket and their c-store had not changed in the past year; while 17% thought it has narrowed a little.
Yet almost half did not actually know how much supermarkets charged for the items they had just bought in a c-store and over three-quarters of convenience shoppers believed that the price hike in convenience stores was acceptable.
What shoppers say they do and what they actually do are quite different, agrees Mike Greene, chief executive of HIM. “People were saying price was moving up the agenda - 55% more this year than last. But they do not make price comparisons in store,” he says.
Even among supermarket shoppers, price is not as important as the industry may think. Just over half said it was the main determinant of where they shopped. Nearly 60% said price was more of a consideration now but a quarter said it was less of a consideration.
“Supermarkets have managed to build up a level of trust in shoppers’ eyes that their prices are cheaper.
“The degree of actual awareness of price is low but confidence in supermarkets having competitive prices is high,” explains Tom Fender, HIM managing director. “Only 30% mention price as one of the reasons they shop in their supermarket. Location was a far higher priority.”
The Pricing Study 2004 also shows multiple convenience formats are not the major threat to independents. Instead they should keep their eyes on main superstores. Nearly 70% of supermarket shoppers top-up shop here and over a quarter of those who visit their convenience store less frequently than a year ago cite supermarkets as the main reason.
“The key for c-stores is to improve availability. About 90% of the population thinks availability of products in superstores is better than in c-stores. Top-up shops in multiples are not about price, they are about availability,” says Fender.
Price is only a dominant factor when operators fail to deliver on service elements. Get these right and price falls down the agenda, he stresses.
“The longer operators go on about price the more they are getting distracted from the key issues and it will end up as a self-fulfilling prophecy,” says Fender. “You can go to the local hardware store once a month and get a smile and ‘how are you’. But go to your local c-store once a week and you are lucky to get a grunt.”
So convenience operators should stop whingeing about price and concentrate on delivering fast, friendly service and strong availability. As Greene says: “The convenience sector spends a 100 hours talking about price and only five about service. If price really is number one in your shop then you probably created it because you are not delivering elsewhere.”
<<p4 C-stores’ price challenge
W hen Big Food Group boss Bill Grimsey bangs on about the lack of a level playing field on price, his words strike a chord with convenience chiefs across the country. Price has been the dominant issue ever since supermarkets began their onslaught into the neighbourhood sector.
But do shoppers really care that much about price when it comes to a convenience trip? And does the price disadvantage threaten the survival of independent convenience retailers?
New research from Harris International Marketing indicates that the answer to both of these questions is a categorical No.
While many convenience shoppers put reduced prices at the top of the list when asked what their store should focus on in the next 12 months (38%), the reality is they are not quite so price-sensitive in practice.
Consider the evidence.
While shoppers say price is key, three-quarters admitted they did not compare prices at convenience stores with those at multiple supermarkets; some 81% would continue to shop their c-store as frequently as they did now if prices remained the same in the next 12 months; and only 5% would shop less frequently, while 11% would increase their frequency.
The vast majority of shoppers do their main shop in a supermarket but 30% believed the gap in prices between this supermarket and their c-store had not changed in the past year; while 17% thought it has narrowed a little.
Yet almost half did not actually know how much supermarkets charged for the items they had just bought in a c-store and over three-quarters of convenience shoppers believed that the price hike in convenience stores was acceptable.
What shoppers say they do and what they actually do are quite different, agrees Mike Greene, chief executive of HIM. “People were saying price was moving up the agenda - 55% more this year than last. But they do not make price comparisons in store,” he says.
Even among supermarket shoppers, price is not as important as the industry may think. Just over half said it was the main determinant of where they shopped. Nearly 60% said price was more of a consideration now but a quarter said it was less of a consideration.
“Supermarkets have managed to build up a level of trust in shoppers’ eyes that their prices are cheaper.
“The degree of actual awareness of price is low but confidence in supermarkets having competitive prices is high,” explains Tom Fender, HIM managing director. “Only 30% mention price as one of the reasons they shop in their supermarket. Location was a far higher priority.”
The Pricing Study 2004 also shows multiple convenience formats are not the major threat to independents. Instead they should keep their eyes on main superstores. Nearly 70% of supermarket shoppers top-up shop here and over a quarter of those who visit their convenience store less frequently than a year ago cite supermarkets as the main reason.
“The key for c-stores is to improve availability. About 90% of the population thinks availability of products in superstores is better than in c-stores. Top-up shops in multiples are not about price, they are about availability,” says Fender.
Price is only a dominant factor when operators fail to deliver on service elements. Get these right and price falls down the agenda, he stresses.
“The longer operators go on about price the more they are getting distracted from the key issues and it will end up as a self-fulfilling prophecy,” says Fender. “You can go to the local hardware store once a month and get a smile and ‘how are you’. But go to your local c-store once a week and you are lucky to get a grunt.”
So convenience operators should stop whingeing about price and concentrate on delivering fast, friendly service and strong availability. As Greene says: “The convenience sector spends a 100 hours talking about price and only five about service. If price really is number one in your shop then you probably created it because you are not delivering elsewhere.”
<<p4 C-stores’ price challenge
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