With all the doomsday news about the economy, we felt a breath of fresh air when we read that the convenience store market is growing.
In the 2012 Grocery Retail Structure report, it shows that the total number of outlets defined as convenience stores has increased by 0.6% in the year to March 31, up from 41,031 to 41,291.
This came days after we attended the Symbol Summit 2012. With presentations from many of the senior executives from Nisa, Costcutter, Premier, Mace, and SPAR. Overall, it was a highly informative and enjoyable event.
- Growth is expected – most presentations over the two days, talked about the historic and future growth of the segment:-
- Historic – The actual financial performance of the segment is very impressive. The symbol segment grew 6% YoY (10-11) compared to other segments within the convenience sector, ranging from 1.6%-3%.
- Future – IDG Research has forecasted the convenience sector will grow in value by 25.7% from £33.6bn in 2011 to £42.2bn in 2016.
- Multiple format offerings – many of the symbol groups are now offering multiple formats, for example, we posted on our blog the announcement of the launch of Nisa’s Loco – the name is “Local Convenience” abbreviated. Nisa has set a target of opening 150 stores by the end of March 2013. Loco stores are generally smaller operations less than 3,000 sq ft. This will allow symbol group operators to execute an intensive distribution strategy with through various brands formats with varying customer value propositions to meet the needs of the local market.
- More effective marketing – there were regular references to developments of in-store promotions and better collaboration with suppliers was needed. Some of the marketing communications tools which were discussed include direct mail, sponsorship, an appearance of TV advertising for those groups which had reached critical mass such as Nisa, and the emergence of digital and online being seen as essential in the coming years. How social media will integrate within the full marketing mix? It is yet to be seen, but many symbol groups are now experimenting with various initiatives as it will strengthen their engagement with the local community which remains to be a competitive advantage for the segment.
- Opportunities – John Walton, chief economist at IGD Research outlined the opportunities to the symbol group operators including, anti big business sentiment, continued development of the role as social anchor for community, inexpensive retail property due to consumer downturn, and shopper requirement for small, timely grocery purchases.
In summary, it is a very exciting time in the convenience market, and more so in the symbol group segment where operators are continuing to “add value” to the relationships they have with their members and customers.
What do you think the future of the convenience market looks like?