At £38bn, the UK convenience store sector makes up one-fifth of the country's total grocery market. Data and analytics company, GlobalData, believe that this market will grow by 22.0% by 2022. This, and similar projections worldwide, present significant growth opportunities for retailers.
A Nielsen Shopper Trends report indicates that 38% of U.K. shoppers visit a new convenience store as they pass them, and convenient location is one of the top three reasons for choosing a convenience store. Having a store in a good, accessible location with convenient parking and good transport links are crucial for capitalising on the important food-to-go category and enables time-poor shoppers to quickly stop in on the way home from work for their groceries.
Smaller stores are now the foundation of the growth strategy for many retailers, as they allow them to attract shoppers that may have been previously out of reach. Opening smaller stores in densely populated areas with high foot-fall will help attract urban shoppers, while online shopping will support growth in the suburbs.
Big supermarkets, which in the past adopted a bigger is better approach are now moving their focus to the opportunity that is offered by the convenience sector.
Global Convenience Retail Market Trends
In the UK, Marks and Spencer's who have implemented RDM building controls and remote monitoring tools across their estate, announced £5.9bn revenue from food sales in 2018, representing 3.9% growth. With their Simply Food stores named top of a new convenience store satisfaction survey published by consumer watchdog Which? While Heart of England Co-op, also an RDM customer, reported an 8% rise in like-for-like convenience store sales, in 2017. With growth predominantly being driven by their convenience stores which achieved an overall increase of 8.3%, compared to an increase of 2.5% for its larger stores. With one store seeing sales soar, after a re-fit featuring new and improved freezer and refrigeration display cabinets, chilled wines area, bakery and a food-to-go section.
In the US, organic grocer Fresh Thyme Farmers Market celebrated strong growth in 2018. According to SPINS data, the Downers Grove, Illinois-based grocer recorded 19.8% dollar growth. During the period, the grocer opened new stores in Minnesota, Ohio, Missouri, Indiana and Pittsburgh, bringing its store count to 75 locations throughout the Midwest. With four new locations scheduled in 2019.Major retailer Target will open only two of its traditional stores in 2019. Rival Walmart (WMT) is also slowing down new store openings. It plans to open fewer than 15 superstores this year, instead, they will invest in retrofitting stores and online growth.
Asia's leading convenience retailers are predicted to grow 6.6% a year to 2022 by US$5.1trillion, according to the latest forecast from international research organisation IGD. Based on a survey of the top 10 Asian c-store retailers, the new research anticipates that convenience will be the fastest growing bricks and mortar channel in Asia over the next five years, resulting from both retailers expanding their networks and shoppers changing their shopping habits. One retailer Econsave has set an annual growth target 25%. With such an ambitious goal, the retailer identified a need to streamline their energy management and minimise costs for their various sites in Malaysia. To support their plans they have put in place an energy management strategy supported by RDM energy management and remote monitoring solutions.
What Can Retailers Do?
Regardless of country, retailers face similar challenges and opportunities. Real-estate typically costs are higher in the areas that offer the greatest opportunity. However, this is rewarded by the fact that more common than not, small format stores earn more per square foot than large format stores.
In the UK, refrigeration, internal building maintenance and in-store lighting were listed in the top five areas of investment for convenience stores in the UK – totalling 46%, 30% and 13% respectively. With air-conditioning not far behind, representing 11%.
Positive shopping experiences are also critical regardless of the channel – on or offline, small or large format. Retailers must therefore not only provide practically laid out stores, with a comfortable shopping environment, but fresh quality produce, and manage energy spend to allow investment in customer-facing areas. They should also protect their brand by adhering to strict HACCP food legislation.
To do this they need a Building Management System that will help them provide optimal temperatures, in both the retail store and food display cabinets, while giving the ability to perform and record effective temperature due diligence, both on and off-site.
RDM energy management solutions are used by leading retailers, big and small, worldwide. Including some of those mentioned in this article - M&S, Co-op, Fresh Thyme and Econsave. View our case studies to find out how our solutions have helped them save millions in energy costs and keep them HACCP compliant.