Convenience stores have got used to reading their own obituaries.
Yet now, as the menacing cloud of recession gathers, many are tipping them to be the surprise beneficiaries. The theory goes that in an economic downturn, shoppers are less willing to drive their cars to out-of-town supermarkets and prefer to walk to their local store, saving money on petrol and food . It all sounds highly plausible but is it borne out by the evidence?
Well, yes and no. The latest TNS Worldpanel data shows the total independent retailers' share of the grocery market actually dropped from 2.7% to 2.5% in the 12 weeks to 5 October against an increase from 92.9% to 93.3% for the multiples, the hard discounters in particularly doing well. In a recent Association of Convenience Stores survey, meanwhile, 55% of shoppers said they would be prepared to shop more frequently at their local store during the recession, but 43% claimed they wouldn't - hardly a unanimous endorsement.
They also highlight research published last month by Unilever and My Shop is Your Shop - the Federation of Wholesale Distributors' campaign to promote independent c-stores in their local communities. The research indicated that 20 million people a day were walking to their local stores, saving themselves a combined total of £2m in petrol a day.
Their case is strengthened by the release of strong figures from a number of independent retailers. Harry Tuffins reported like-for-like sales growth of 5.5% for the six months to 10 August (outperforming both Tesco and Sainsbury's ), for instance, while Spar retailer Alfred Jones posted a 1.6% jump in pre-tax profit and 1.5% in sales for the year to 27 April.
"The credit crunch and high levels of eco-awareness among consumers are combining to bring a new balance between local shopping and the big weekly superstore visit," says MSYS chairman Alan Toft.
That may be so, but not all consumers give an honest assessment of their shopping behaviour and even if they do, not all c-stores benefit from changes in behaviour, which is why the TNS data is at odds with the findings of many of the consumer surveys. "For convenience stores, the figures hide a lot of variation," agrees Ken Parsons, CEO of the Rural Shops Alliance. "Some are suffering badly from the economic downturn, while others are doing really well."
The independent retailers that do perform strongly are those that see the recession for what it is: an opportunity. In August, buying group Landmark Wholesale launched a campaign called Shop Local, Shop Often, Shop Less encouraging shoppers to save £11 a week on average through reduced food waste.
"At the moment everyone is looking for ways to save money," says Geeta Doal, joint owner of Doal's Food & News in Wheaton Aston, Staffordshire, who has been heavily promoting the campaign in her store. "Already I've seen people coming in more often and buying items just to last a couple of days. Once they try shopping this way and see the difference it makes to their wallets and the amount of food they throw out, they realise it makes sense."
Other initiatives include Costcutter's new loyalty card scheme, which awards customers one point for every £1 spent in their local store and may be rolled out to 500 stores. To really benefit from the credit crunch, c-store owners need to ensure the offer is right, however. "They have to demonstrate that they can provide real value locally," says Philippe Rondepierre, business development manager for Spar wholesaler CJ Lang. "Emphasis must be placed on sound implementation and prominent presence of relevant promotions."
Paradoxically, if the multiples continue to focus on own label at the expense of brands, this could give c-stores the chance to push their branded offer. "We've outlined at retail and wholesale level the core range and bestselling 'must stocks' that retailers should stock to make sure they can meet their customer requirements," says Landmark MD Martin Williams, who recently urged branded suppliers to increase business with c-stores rather than fighting a losing battle with the multiples.
A good fresh offering is another must, says Rondepierre. "Without a credible fresh offer we cannot expect to prise shoppers away from supermarkets," he says.
It's also vital that retailers play a civic role in the local community, believes Tom Fender, a director at Him! "Catchments are tight around c-stores - typically customers within half a mile will account for more than 65% of the spend coming into their tills," he says. "How retailers communicate with them determines how successful they are ."
Those that view the recession as the opportunity it is will find that rumours of the sector's death have been greatly exaggerated.
Yet now, as the menacing cloud of recession gathers, many are tipping them to be the surprise beneficiaries. The theory goes that in an economic downturn, shoppers are less willing to drive their cars to out-of-town supermarkets and prefer to walk to their local store, saving money on petrol and food . It all sounds highly plausible but is it borne out by the evidence?
Well, yes and no. The latest TNS Worldpanel data shows the total independent retailers' share of the grocery market actually dropped from 2.7% to 2.5% in the 12 weeks to 5 October against an increase from 92.9% to 93.3% for the multiples, the hard discounters in particularly doing well. In a recent Association of Convenience Stores survey, meanwhile, 55% of shoppers said they would be prepared to shop more frequently at their local store during the recession, but 43% claimed they wouldn't - hardly a unanimous endorsement.
Walk & Shop: how the scheme has evolved
My Shop is Your Shop launched Walk & Shop earlier this year to encourage shoppers to help protect the environment by walking to their local c-store. But its priorities soon changed as the credit crunch took hold.
“At first retailers were reporting increased shopper awareness of climate change and carbon reduction issues,” says MSYS chairman Alan Toft. “But as the credit crunch began to bite, retailers told us shoppers were increasing the frequency of store visits and were buying groceries on a ‘just in time’ basis.
“So we made Walk & Shop a dual promotional platform. Shoppers are now encouraged to see savings in petrol costs and ‘just in time’ purchases as a local double-deal.”
The next stage will be to forge links with local shops and schools, with activities including climate change poster competitions for pupils, sponsored walking races at school sports days and independents promoting school ‘walking buses’.
C-store operators nonetheless insist that the tide has turned in their favour. They cite last week's IGD's Shoppers and the Credit Crunch survey, which suggested that 21% of shoppers had walked to the shops more frequently in the past six months than they had before. My Shop is Your Shop launched Walk & Shop earlier this year to encourage shoppers to help protect the environment by walking to their local c-store. But its priorities soon changed as the credit crunch took hold.
“At first retailers were reporting increased shopper awareness of climate change and carbon reduction issues,” says MSYS chairman Alan Toft. “But as the credit crunch began to bite, retailers told us shoppers were increasing the frequency of store visits and were buying groceries on a ‘just in time’ basis.
“So we made Walk & Shop a dual promotional platform. Shoppers are now encouraged to see savings in petrol costs and ‘just in time’ purchases as a local double-deal.”
The next stage will be to forge links with local shops and schools, with activities including climate change poster competitions for pupils, sponsored walking races at school sports days and independents promoting school ‘walking buses’.
They also highlight research published last month by Unilever and My Shop is Your Shop - the Federation of Wholesale Distributors' campaign to promote independent c-stores in their local communities. The research indicated that 20 million people a day were walking to their local stores, saving themselves a combined total of £2m in petrol a day.
Their case is strengthened by the release of strong figures from a number of independent retailers. Harry Tuffins reported like-for-like sales growth of 5.5% for the six months to 10 August (outperforming both Tesco and Sainsbury's ), for instance, while Spar retailer Alfred Jones posted a 1.6% jump in pre-tax profit and 1.5% in sales for the year to 27 April.
"The credit crunch and high levels of eco-awareness among consumers are combining to bring a new balance between local shopping and the big weekly superstore visit," says MSYS chairman Alan Toft.
That may be so, but not all consumers give an honest assessment of their shopping behaviour and even if they do, not all c-stores benefit from changes in behaviour, which is why the TNS data is at odds with the findings of many of the consumer surveys. "For convenience stores, the figures hide a lot of variation," agrees Ken Parsons, CEO of the Rural Shops Alliance. "Some are suffering badly from the economic downturn, while others are doing really well."
The independent retailers that do perform strongly are those that see the recession for what it is: an opportunity. In August, buying group Landmark Wholesale launched a campaign called Shop Local, Shop Often, Shop Less encouraging shoppers to save £11 a week on average through reduced food waste.
"At the moment everyone is looking for ways to save money," says Geeta Doal, joint owner of Doal's Food & News in Wheaton Aston, Staffordshire, who has been heavily promoting the campaign in her store. "Already I've seen people coming in more often and buying items just to last a couple of days. Once they try shopping this way and see the difference it makes to their wallets and the amount of food they throw out, they realise it makes sense."
Other initiatives include Costcutter's new loyalty card scheme, which awards customers one point for every £1 spent in their local store and may be rolled out to 500 stores. To really benefit from the credit crunch, c-store owners need to ensure the offer is right, however. "They have to demonstrate that they can provide real value locally," says Philippe Rondepierre, business development manager for Spar wholesaler CJ Lang. "Emphasis must be placed on sound implementation and prominent presence of relevant promotions."
Paradoxically, if the multiples continue to focus on own label at the expense of brands, this could give c-stores the chance to push their branded offer. "We've outlined at retail and wholesale level the core range and bestselling 'must stocks' that retailers should stock to make sure they can meet their customer requirements," says Landmark MD Martin Williams, who recently urged branded suppliers to increase business with c-stores rather than fighting a losing battle with the multiples.
A good fresh offering is another must, says Rondepierre. "Without a credible fresh offer we cannot expect to prise shoppers away from supermarkets," he says.
It's also vital that retailers play a civic role in the local community, believes Tom Fender, a director at Him! "Catchments are tight around c-stores - typically customers within half a mile will account for more than 65% of the spend coming into their tills," he says. "How retailers communicate with them determines how successful they are ."
Those that view the recession as the opportunity it is will find that rumours of the sector's death have been greatly exaggerated.
Five recession-beating tips
Availability - if a customer walks all the way to your store and can't find the product they want, they'll go elsewhere
Basics - consistently fulfilling distress purchases such as milk, bread and tobacco will keep shoppers returning
Brands - supermarkets are placing a greater emphasis on own label. This could allow c-stores to push their strength in brands
Community - play an active role in your community by sponsoring or donating to local events, or holding your own
Appearance - a clean and tidy store with a good layout and friendly staff will encourage repeat visits
Availability - if a customer walks all the way to your store and can't find the product they want, they'll go elsewhere
Basics - consistently fulfilling distress purchases such as milk, bread and tobacco will keep shoppers returning
Brands - supermarkets are placing a greater emphasis on own label. This could allow c-stores to push their strength in brands
Community - play an active role in your community by sponsoring or donating to local events, or holding your own
Appearance - a clean and tidy store with a good layout and friendly staff will encourage repeat visits
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