What’s happening in the convenience sector?
Date: July 06, 2015
Category: Industry news, Opinion piece
Martin Janes, Head of Foodservice & Convenience at GS1 UK, recently attended the Openroom events C-Store Forum UK. An event which brings together those that matter from the convenience sector of grocery retail in the UK & Ireland.
In the 12 months to April 2015 the convenience market generated £37.7bn in sales. This represents a year-on-year increase of 5.1%. This growth clearly represents a significant opportunity, but there are challenges to be faced along the way.
There is consensus that convenience retailers, wholesalers and manufacturers are being challenged to respond to a rapidly evolving market – from the digital revolution, increased competition to a marked-change in consumer behaviour.
So, what's the low-down?
The modern shopper has an appetite for joined-up, consistent experiences. This calls for the bringing together of the traditional retail model with new technology.
Convenience retailers are well aware that ‘digital’ is crucial to the success of their business, how shoppers are changing with greater reliance on smart phones and tablets, the growth with click and collect and the sharing of views and reviews now commonplace on social platforms.
The common concern for those attending C-Store Forum was, does this really affect me? If it does, how can I respond? Where would I get the best advice on what needs to be done?
The convergence of the traditional store experience and online is already here. Convenience retailers must act now if they are to survive.
How? By sharing – and aligning – resources to reach the common goal of meeting the needs of the customer by leveraging technology, best practice and GS1 standards.
While it seems collaboration between retailers, suppliers and manufacturers is commonplace across convenience multiples, the same can’t be said of the rest of the convenience sector.
It is widely accepted that convenience store operators have the scale and expertise to fight the growth of the multiples and that a collaborative approach is essential. But, when talking with the retailers, there is a reluctance to step forward to pull this together – with a reliance on ‘others’ to do the work – and the rest to reap the benefits.
The sector has been reliant for years on support and services from wholesalers and symbol groups for retail best practice and development. Is this enough now? Or, is it time for the rest of the sector to develop and utilise their own expertise, desire and agility to respond to their current needs?
Improving data quality and understanding how it can be shared efficiently between trading partners represents a big opportunity for the Convenience sector.
By enabling the unique identification and smooth exchange of products and information – from source to consumers – GS1 standards and solutions create the foundation for successful Convenience operations.
Threat from multiple grocery retailers
The total number of convenience stores stands at 46,161 (June 2015), up 0.9% this year. An increase mostly due to the continued growth of convenience multiples.
IGD research shows convenience multiples have seen the largest increase in store numbers, up 10.6% year-on-year.
Convenience store operators understand their USP’s (local, flexible, innovation, customer service to mention a few), but are still unsettled by the growth coming from multiple grocery retailers. This is understandable given the highly fragmented sector!
The convenience sector is set for continued growth. Especially given the fragmented nature of the market and the shift in consumer demand from big-box out-of-town destinations to more convenient locations.
The only way for convenience retailers to respond to the threat of multiples entering the market is to firm up their business operations and to harness – in particular – efficiencies, agility and shared common platforms.
The need for timely, accurate and standards-based product data ever-greater. GS1 UK’s drive for collaborative standards across the entire Convenience community is what will enable an efficient and profitable operating model, that’s fit for the long-term.
Food information to consumers
We’ve seen the introduction of the Food Information to Consumers Regulation, which, among other requirements, mandated changes to UK packaging for how allergens are distinguished and how nutritional information is listed.
There is very little understanding by convenience retailers on how this legislation affects them, do they need to provide this information? Even in the retailers that had developed credible foodservice offers, there is no real understanding on what needed to be done now and for a sustainable future for information provision.
All businesses involved in the supply and sale of food and drink products have responsibilities around the provision of information to consumers – especially under new FIC 1169 rules.
At GS1 UK, we have been supporting our members along the whole process – find out all you need to know here.
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