The Year of Retail FragmentationDecember 1, 2014
Convenience Store News | December 1, 2014 – As we close out the year and look to 2015, it is evident that retail has never been more fragmented. Today’s consumer has many options and is shopping at more places than ever before.
The notion of a “primary store,” for most, has gone away as consumers now shop multiple formats for their everyday needs — from supercenters to traditional grocery stores, hard discounters, dollar, convenience, specialty stores, online and more.
The supply chain is also highly fragmented, enabled by digital, with more ways to get product — from physical stores to online delivery to a range of new direct-to-consumer models. The role of primary shopper is fragmented, too, with several members of the household now doing the shopping.
Yet, in this fragmented retail world, convenience stores have a unique opportunity that is driven by consumers’ hectic lifestyle and demand for easy in-and-out, “on the go” retail.
When you add urbanization, a growing aging population with a preference for smaller formats, and the rise of single and smaller households, it’s no wonder that even big-box retailers are working hard to get more “convenient” by focusing on smaller and express formats.
With more smaller, convenient competition than ever, we will see convenience retailers working even harder for their share of shoppers.
Here are five predictions for the convenience channel in 2015 and beyond:
1. While we will see most of retail getting micro-sized (smaller formats), we will see traditional convenience stores buck the trend and get bigger. These stores will be larger and evolve to become more like convenient “superstores” with more space devoted to fresh prepared foods and made-to-order options, quick-service restaurants (QSRs) and expansion of in-store experiences and services for key consumer segments.
2. With a sea of new, small-box competition, convenience stores will look to capture share and drive trips through hyper-focused strategies. This will play out in several ways. For example, some convenience stores will become hyper-localized (focus on local community/local products). Others will become hyper-specialized in specific areas like a specialty branded coffee bar experience to capture the coffee trip. Still others will become hyper-focused on specific consumer segments, such as products and services tailored to Millennials or the growing aging population.
3. Convenience stores will go head to head with QSRs with innovative fresh food options. Convenience stores will answer the consumer’s call for healthy “fast” food by expanding their “fresh” proposition with more freshly prepared meals and snacks, and made-to-order options. Some will look into daypart strategies. Others will look to leap far beyond traditional QSR operators with differentiating menus and experiences. With that, we will see the rise of unexpected food products at convenience stores such as innovative handheld snacks (e.g. fresh fruit on a stick, meat and vegetable kebabs) and urban-inspired street food for “on the go” consumption (e.g. Belgian waffle breakfast sandwiches) and even handheld desserts.
4. Convenience stores will look to get even more convenient — innovating checkout lines with new queues designed to encourage impulse shopping, adding drive-thrus and even in-store services designed to drive trips. Digital will further enable convenience with more digital integration into merchandising (sodas, milkshakes), and digital kiosks for made-to-order coffee and food. In the age of anytime retailing where shoppers are expecting retail any time day or night, convenience stores have a unique opportunity to capture a new shopper base with very different work hours than we’ve seen in the past.
5. Convenience stores will make it “for me”. Consumers are looking to express their individuality through the products they buy and driving the desire for customization. Convenience stores will answer the call with more “make your own” and customizable solutions. We will see make-your-own juice/smoothie bars, build-your-own snack bars (trail mixes, candy solutions), and more made-to-order foods for on-the-go consumption across all dayparts.