With more people staying at home and working from home over the past 18 months, we’ve seen a huge increase in shopping locally. The convenience channel has experienced significant growth during the pandemic and has claimed its place as a clear winner in the marketplace as a new, preferred way to shop. As retailers recognise this and look to expand their product and service offering, brands are identifying more opportunities within this growing sector. The development of data analytics and online influence in convenience has made it easier to maximise reach and tailor a winning brand strategy for FY22. We interviewed two inhouse experts, Gerry McGeehan, Account Controller for News UK and Jonny Short, Account Manager for Pernod Ricard to find out the key changes experienced by their clients and any trends they foresee for the future.
The convenience sector has seen significant shifts over the last 18 months due to the pandemic. What do you think are the biggest changes that have occurred and what should brands consider when they prepare their FY22 strategy?
Jonny Short, Account Manager
In the last 18 months in convenience there has been a massive spike in sales. The particular spike came in the early days of lockdown with shoppers unwilling or unable to get to the large supermarkets. In that period, we saw higher basket spends and consumers started to explore that out of home experience at home with meals and home cinema nights or experimenting with cocktail making from their kitchens. It was all fresh food, meal solutions and snacks and alcohol that saw a big spike in sales. Initially, when restrictions started to ease, we saw consumers remain loyal to convenience stores but we were bound to see a slight drop in sales as restrictions completely eased and crowds returned to large supermarkets and hospitality for their food and drinks. However, even now with more of us working from home, convenience stores are still evolving as demand for them is still high.
They went from being seen as a sort of top up shop to offering a wider range of products and services, and there are definitely opportunities here for brands because of that. The biggest changes I’ve seen are around range and availability. High basket spend are still on with consumers picking up more products than pre pandemic levels when they go to stores. Therefore, something retailers are focusing on is having the right range and availability. This is really important for maintaining relationships and building trust with consumers. Due to the spike in sales, convenience retailers will do everything they can to focus on repeat purchases and maintaining that custom as we move out of the pandemic.
The second part is around home deliveries which grew massively during lockdown. Convenience retailers were looking for more ways to drive incremental revenue but maintain the connection with shoppers who couldn’t get to store. You can see by the number of delivery apps on the market that this is something that’s here to stay. Across the board stores are becoming more digital savvy, engaging with consumers or communities on social media or using home delivery apps and online reward and education apps. Retailers are really buying in to this digital age, connecting with consumers or suppliers. We’ve also seen a shift in home solutions and kits. For example, Havana Club rum is linking up with Deliveroo and doing a rum experience kit you can order to your home. Not only do you get your bottle of rum, you get a mixer, a glass and a pack of cards too which provides home entertainment. It gives people the chance to trade up to something that is more experiential than just a straight bottle of spirits.
The final change is in value solutions. People began treating themselves during the pandemic and premiumisation is still a big thing but they are also looking for a value offering too.
Gerry McGeehan, Account Controller
The biggest change that we've seen has been the growth in convenience retail footfall - people shopping more often and more locally. We've seen a huge growth in convenience retail and in the last two months we've started to see a recovery in grocery. Key for convenience retailers is how we retain as much of that footfall and value sales going forward. The biggest drivers of that have been the change in people's routine and habit – working from home, socialising and entertaining at home. But now we’re starting to see huge numbers returning to work and returning to offices. Hopefully that becomes a hybrid situation, working two or three days at home and in the office as well. This means we may see another change in habits and behaviours again which as a convenience sector we need to be mindful of and ready to react to.
In terms of underlying consumer trends there are two things to pick out. One is the heightened health and environmental aspects - we’re seeing an increase in meat substitutes and plant-based diets with HFSS regulations on the way too, and a greater focus on health and well-being in terms of the brand promotions that we run. That’s countered by the trend towards entertaining and treating at home. Whilst you’ve got the healthier environmental lifestyle on one side, the flip side is that people are looking for a premium quality and value from their convenience stores – like family packs and more multipacks through the summer for outdoor entertainment. There are consumer behaviour trends that brands need to be aware of.
What approach do you think brands should take post-covid and are there any new opportunities they can take advantage of in convenience?
Gerry McGeehan, Account Controller
For convenience, the key to this is considering the changes that retailers have adapted to. Some of that is through the ranging and the services that they offer, for example, we've seen an increase in home deliveries from convenience retailers. What brands need to do is tailor and target their support specifically for convenience retailers. So, that’s working with them to support their store and helping them realise the value opportunities within categories and not just a branded product approach with retailers. They should be matching, tailoring information, education and support that we can provide to retailers and then tailoring this to the opportunity, the facia and the local geography. There are five main areas which are important within that. Two fall within EPOS analytics, two are ways in which they can engage digitally with retailers and we also shouldn’t forget the ways in which retailers can retain their clientele too.
- Through a partnership with In-Touch Group we’re able to export convenience EPOS analytics on what’s been bought, at what time of day, time of week and basket spend. This helps brands tailor their approach by retailer type, brand and category.
- The second EPOS development available to brands is our Pinpoint product, an EPOS analytics tool that leverages the largest, most granular, convenience EPOS data available in the UK to helps brands harness the power of their field team. It delivers interrogatable insight on sales performance, distribution ranging, market share and pricing, and is underpinned by a full database record and data export functionality. This means that for the first time ever in convenience field teams can be in the right place at the right time. Brands can finally be confident that their field teams are being directed to the biggest opportunities locally – and tailoring their sales approach based on local opportunities, local data and local trends.
- There are also ways to support convenience retail stores digitally. MyStore+ is a convenience focused app that gives brands the opportunity to engage directly with retailers in a digital way. They can provide education and information for stores, support their retail partners with category insight, and provide incentives and rewards for execution of standards and compliance.
- Another new opportunity in convenience is consumer offers and couponing which can drive footfall into store to help retailers retain the sales growth they have seen over the last 18 months.
- Lastly, brands shouldn't lose sight of the value of traditional styles of support premiums to help retailers engage their shoppers. This could be bottle openers for beers, wines and ciders through to newspaper bags to support with the growth in home news delivery, or the simple NPD samples for retailers to engage with our brands and products but also to enable them to do this with their shoppers.
How can agencies best support brands to maximise sales in this new retail environment?
Jonny Short, Account Manager
In convenience, I think the number one way agencies can support brands is through education on the range. The average convenience retailer has thousands of products to look after and very little staff to manage this so, having a brand rep come into your store frequently and offer advice on how to make every bit of space work for you, as well as bringing new product category advice, is key to building trust between the retailer and the brand. The agency can offer a face to the brand, along with increasing your in-store visibility. The time you spend in a convenience store is still relatively short but because basket spend is up, there’s a massive opportunity to make your brand visible to the consumer. Agencies can really help in terms of making that product stand out, making sure it’s in the right place on the fixture, supporting with selling kits, point of sale, giveaways and increasing that in-store theatre for brands.
Another way is through online engagement – being able to engage with retailers not only on store visits with the brand rep but also through apps such as MyStore+ where we can communicate with the retailers between visits. We can offer the latest product and category news, advice and deals to help drive category sales.
And lastly, agencies like McCurrach can give brands access to scale EPOS data and EPOS analytics driven products like Pinpoint through our strategic partnerships in the marketplace. This can help brands get the insight they need to sell more by understanding how their brand is performing within the category and what’s driving it, which fascias and geographies are performing well and which ones are you not, which products and pricing strategies work and which ones don’t, and also understand what their products are being bought alongside and how much is being spent. Combine this with products like Pinpoint and we can help brands ensure that their field team are working hard for them, being directed to the highest value locations around the country to execute the optimum action with the retailers at any point in time.
Gerry McGeehan, Account Controller
I think they can support through an agile and flexible approach that can be scales up and down to respond to live market trends. In convenience that means matching retailer brand opportunities with brand budget and ensuring we get to the right outlets through the appropriate insights to deliver the correct level of support for both brands and outlets. The outcome of that should be giving consumers reason to continue supporting their local stores.
Our dedicated teams can help you discover new opportunities within the growing convenience sector. Having worked throughout the pandemic, our colleagues are equipped with the knowledge and skills to be agile and stay ahead of the trend to deliver brand success.
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